U.S. Retail is not Slowing Down, as Consumers are Continuing to Spend

U.S. retail is not slowing down anytime soon, as consumers are continuing to spend. While a recession is predicted to be coming, it seems like it won’t have an impact on U.S. retail slowing down. This also kind of shows that Americans are still willing to buy, even amidst a looming recession.

We take a look at: how U.S. imports have done so far this year (near records!) and if that is expected to continue; how e-commerce sales still are on fire and what commodities have seen increases; and are some retail companies beginning to charge for returns?

Near-Record U.S. Imports Expected to Continue into Fall

Some U.S retailers are projecting near-record import volumes throughout this summer and into the fall. The Journal of Commerce (JOC) reports that already stressed ports and inland supply chains should prepare for the ongoing challenges throughout the peak shipping season.

“We’re in for a busy summer at the ports,” Jonathan Gold, Vice President for Supply Chain and Customs Policy at the National Retail Federation (NRF). He continued to say that back to school supplies are already arriving, and holiday items will soon follow.

U.S. imports for the month of June have been predicted to be 7.5 percent higher than last year in June, the JOC reports. Additionally imports in the first six months of this year are expected to increase 5.3 percent from the first half of last year, more reports show.

Additionally, retailers have been continuing to build up their inventories even with consumer demand and supply chain constraints. However, one issue that remains for companies, is trying to figure out how to sell all their products.

E-Commerce Sales Still ‘Crazy Hot’

For the month of May, retail sales had a 0.3 percent decline, which may sound bad. However, “if you take out inflation and retail sales involving motor vehicles and parts – as cars do not go by container – retail sales are still 18 percent above May 2019”, says Jason Miller, Associate Professor of Supply Chain Management at Michigan State University, in an interview with FreightWaves.

Furniture and home furnishing sales this May were still up 4 percent from May 2019, Miller says. Electronics and appliances remain even with May 2019, while building materials and garden equipment is up 11 percent from May 2019.

Additionally, clothing and accessories sales are up 30 percent in May relative to May 2019 and sporting goods/hobby/musical instruments/book sales are up 60 percent (!!) from May 2019, Miller continued to say to FreightWaves.

Retailers Charging for Certain Returns?

When it comes to selling goods, retailers have had an issue with returns – especially involving apparel and footwear. As an increase in fuel, materials and other costs has retail companies considering different options regarding returns. That doesn’t mean it won’t come with some challenges.

One retail company, Zara, informed their U.K. customers that they will be charged $2.45 (or 1.95  pounds) for their customers to return online purchases to third-party drop-off points, Supply Chain Dive reports. As of now, it is unclear if this new charge for returns will come to the U.S., as the decision is made on a market-by-market basis, per Supply Chain Dive.

However, Supply Chain Dive mentions the possible implications that could occur from a profitability perspective. If some consumers see a retailer charge for certain returns, they may opt to shop somewhere else.

Looking Forward

As we go through summer, peak season, the fall/holiday season and into next year, it will be interesting to see what happens, in regards to U.S. retail sales and consumer spending.

As always, if you would like more information regarding this topic, contact our team at InterlogUSA and we will be happy to assist you on any questions or comments you may have! In addition, we have our weekly market updates that can provide you with relevant freight news, updates, developments across the industry, and more.

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