Retail Growth

It was reported that December’s consumer confidence level of 60 was something to be positive about, but how is this increase actually affecting shopping habits? According to a report on Bloomberg.com, “Sales at U.S. retailers increased in January by the most in four months.” In fact, the Commerce Department confirmed there was a 0.4 percent gain in retail receipts, less than the projected 0.8 but an increase nonetheless, compared to the 0.1 percent advance in December.

All in all, the economy seems to be turning around, and much in the favor of retail operators. Some of the contributing factors, according to Bloomberg.com, include, “The drop in unemployment to a three year low, which is evidence of an improving job market that’s essential to sustaining purchases.” Job growth has caused less apprehension in customer purchases, including big-ticket items. In effect, these gains in spending have caused an increase in inventory replenishment, as retailers and suppliers look to meet the demand of customers. Business inventories climbed 0.4 percent in January, a 0.1 percent increase from the prior month’s gain.

It is forewarned, however, that economists predict the increase in gasoline prices could negatively affect spending in the months ahead. As Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, NC, states in a recent Reuters article, “The rise in gasoline prices will likely take a toll on spending in coming months, unless income growth improves.” Still, the retail sales report adds to a recent run of fairly upbeat economic data, which some analysts say reduces the need for the Federal Reserve to ease monetary policy further, according to Reuters. With so many upward trends, “It’s hard to argue against the case that the U.S. economy is gaining momentum,” says Millan Mulraine, a senior U.S. strategist at TD Securities in NY.

Consumer sales are predicted to grow at a faster rate than many other industries in 2012. The continued success of retail will be driven by an impressive amount of innovation, particularly in the mobile and social realms. STORES magazine also predicts the next 12 months will yield more partnerships between retailers and vendors and between retailers and their competitors. Secrecy that once existed between competitors is slowly giving way to problem solving dialogue, in an effort to drive more sales and improve the industry.

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