Eye on Retail: Strong consumer spending drove U.S. retail sales growth in January

The new year kicked off with retail gains across nearly all sectors and all 50 U.S. states.

Retail sales in the U.S. (excluding automotive and gasoline) increased 9.2% year-over-year, with online sales growing 62.1% compared to 2020, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment. The momentum of a stronger-than-anticipated holiday season continued throughout the month, with consumer spending buoyed by an infusion of stimulus payments, particularly in the first two weeks of the year, the report said.

While January brought growth across all 50 states, states in the Southeast and the West are driving the largest increases of total retail sales, according to Mastercard. More outdoor options are available in the warmer Southern states and online sales growth has surged in the Western states. Also, e-commerce has become a critical driver of sales growth across the country. In California, for instance, online sales grew 77.4%, helping to lift retail sales overall to 7.9%.

"For consumers, e-commerce has emerged as a lifeline and a lifestyle,” said Steve Sadove, Mastercard senior advisor and former CEO of Saks. “January’s numbers are just further proof of this ongoing trend. A big, bright note from January is that consumers are spending. While we know that consumers are also saving their stimulus funds and paying down debt, these numbers show that stimulus is helping to boost sales for retailers around the country."

At a national level, key retail trends from January include the following.
•    Home is Where the Spending Still Is: Spending in and around the home remains a top consumer priority, with furniture and furnishings (+16.6%) posting its eighth straight month of solid gains. Home categories, along with grocery, have seen some of the biggest category lifts following stimulus payments.

•    Consumers Start to Refresh their Wardrobes: Following months of working and schooling from home, we’re starting to see consumers invest in their wardrobe again—with specialty apparel online sales up +52.5% in January. Although the sector is still down (-4.3%), this is the smallest year-over-year decline experienced since the pandemic began impacting sales in March 2020.

•    A Positive Sign for Department Stores: The department store sector experienced its first year-over-year increase in sales (+1.5%) since 2019, boosted by strong online sales (+27.9%).

•    Gasoline Sales Reflect Restricted Mobility in January: No sector has been a clearer bellwether of consumers’ mobility this past year than gasoline sales, with negative year-over-year growth since mid-March 2020. While the declines eased over the summer months, COVID-19 restrictions, as well as winter weather, led to a further deterioration in gasoline demand in January.

Around the country, Mastercard SpendingPulse analysis shows that the overall retail story remains largely positive:

Key SpendingPulse insights will now be published monthly on Mastercard.com/news.

“For governments and businesses of all sizes, access to timely, data-driven insights is critical to decision-making—particularly in times of uncertainty,” said Raj Seshadri, president of data and services, Mastercard. “By sharing economic insights such as SpendingPulse, we hope to enable smarter decisions with better outcomes today and for the long term.”

[This article was originally published on chainstoreage.com.]