July ’23 Retail Report: Summer Sales Bring a Soft Landing

The Big Picture

Overall retail sales continue to be steady this summer, with June representing a 0.2% increase over the previous month. May sales were also revised higher with a 0.5% gain, according to the U.S. Commerce Department.

Clothing stores posted a 0.6% increase from last year, while department stores dipped. Online sales continued to outpace in-store, increasing 1.9% last month.

On the upside, inflation has slowed considerably to around 3%, compared to 9% a year ago. But the Fed is still weighing another rate hike to keep prices in check. Gas remains high, but some food items are starting to come down, bringing a bit of relief to shoppers.

In terms of savings, consumers still have more money in their bank accounts than they did before the pandemic— around 10% to 15% more — but debt is rising, meaning that many middle and working class consumers are still being squeezed.

June Sales

Among our client stores, sales were mostly flat last month with menswear down by 1%, and women’s falling by 4%. It’s worth noting, however, that we were going up against some large gains from a year ago, so the June 2023 figures indicate that we made it over the hump, into what appears to be a soft landing.

In Men’s, Clothing categories continued to bring in the lion’s share of gains. They were up by 6%, while Sportswear dipped by 4%.

In Women’s, Special Order soared by 71% from last year, helping to balance out the 31% drop in Dress sales.

The next sales hurdle comes in August when we go against a 24% gain from a year ago. You will need fresh merchandise to make these numbers. Fortunately, we are hearing from our clients that everything new sells.

Spring ‘24 Buys

It’s also time to plan your buys for next spring and this is where we need to be cautious.

Overall inventory levels are increasing well above sales, so if you buy too much it could put you in a dangerous position as we head into what could be a slowdown around the presidential election next fall.

You want to be running lean by next summer to insulate your business from these risks, so make a conservative open-to-buy plan and don’t exceed it.

It looks as though we have avoided a sudden slowdown in the post-pandemic recovery, but we still have to navigate the consumer caution that comes with a lot of negative media.

Blacks’ Bottom Line

We’ve had a remarkable season so far, given last year’s substantial gains. But don’t let these wins keep you from taking a cautious approach heading into next year.