March 2023 Retail Report: Sales Cycle Starts to Flatten

The Big Picture

It has been a bumpy few weeks in the U.S. economy, with regional bank failures, continuing high inflation numbers, and market uncertainty.

While retail sales cooled, dropping by 0.4% in February from the previous month, the Fed decided to once again raise interest rates by a quarter point last week in an effort to keep inflation in check.

Inflation was up 6% for the year ending in February, notching down slightly from the 6.4% rate in January. It was the eighth straight month that inflation came down, but it is still far from the Fed’s target rate of 2%.

With prices still high, consumers pulled back on spending in department stores last month — sales were down by 4%. Demand also dipped for home stores and food and drink services.

Hopefully, with the Easter holiday and spring travel we will see a pop in business later this spring.

February Sales

Total sales in our client stores dipped 1% last month, after a very strong showing in January. But, while women’s wear was down by 5% on average menswear still managed to post a 2% gain over last February.

Remarkably, Men’s Clothing categories are still showing a strong performance, up by 12% last month. It appears that men’s desire for suits, sport coats, and other formalwear is unabated, fueled by summertime special events.

In Women’s, the Dress trend finally slowed, with sales down 9% compared to last year. This was probably due to the cold weather in February; we expect dresses to pick up again as we get into warmer weather.

Although sales flattened out, as we predicted, we were going against some big numbers for the first quarter of last year. Given this, we are not as concerned as we would be if we were seeing negative numbers against a weaker year-ago scenario.

Fall Plans

Looking ahead, we expect business to be flat for fall but we are going against smaller numbers so there is some opportunity to make gains. You will need to keep a close eye on your stock-to-sales ratios to make sure that you do not get long in inventory. 
There are some new trends in sportswear and outerwear. One hot trend in particular is longer coats of all types, so make sure that you don’t miss out.

We are also hearing that the most expensive items are selling well. This is good news because our wealthier customers do not seem to be shaken by the recent earthquakes in the banking sector.

Blacks’ Bottom Line
To overcome this flat cycle keep tight control of your stock-to-sales ratio, while keeping your marketing efforts fired up to incite demand.