The Big Picture
Overall retail sales notched up by 0.3% in May compared to April, and made a 1.6% gain over last year. Early summer travel accounted for some of the momentum, along with a more positive attitude among consumers.
Some key food prices are starting to come down, and inflation looks to be in check.The Fed paused interest rate hikes in their recent meeting, although two more increases are in the cards for later this year.
In the wider market, sales of apparel, shoes, and accessories stayed flat from April to May, but department stores saw a slight gain, although they are down 4% from last year. Urban centers continue to be challenged by work-from-home policies, and workers’ pandemic shift to the suburbs.
Among our client stores, menswear was up 1% last month, with most of the momentum coming from Clothing and Special Orders, which were up by 8% and 10%, respectively.
Menswear merchants need to think about how to accelerate their sales of sportswear, since they have been relying on steady Clothing sales for some time. The strength of Clothing will eventually come to an end — how many suits and jackets can men possibly buy? —so we need to excite the sportswear consumer.
In women’s wear, sales came in 2% higher than a year ago, led by special orders. Dresses continue to under-perform, down 10% last month, but we expect the category to improve with warmer weather.
For June and July sales should go well, but in August we are going up against some very big numbers from last year. This may be where we see a dropoff before early fall sales pickup.
Inventory Issues Persist
Inventory continues to pile up as merchants move away from the lean model we honed during the pandemic. This is problematic since sales are not rising in-line with inventory levels.
Start putting a plan together to drive down inventory levels as we reach next summer, since we could be facing some headwinds during the presidential election cycle. We will be sharing more detailed information to help you with this strategy soon.
In the meantime, we need to get back to the kind of events that created excitement in our stores.
Blacks’ Bottom Line
Ask yourself, “after years of easy gains, how do I continue to excite my customers?” This is the challenge many of us face coming off of the pandemic recovery.