Consumers Prove Resilient, Spend More Money In February
It would be an understatement to say the economic recession affected retail sales. With fewer dollars in their pockets, many consumers scaled back spending and only bought items they needed. If they did shell out for non-necessities, it was only when merchants offered the right sale or discount.
But that's old news, and retailers for the most part learned how to deal with cautionary consumer spending. However, just as spending looked to be swinging back in favor of businesses, a new increase in payroll taxes and higher gasoline prices once again raised the question of whether consumers would go back into their conservative ways.
Fortunately, new data collected by the National Retail Federation (NRF) suggests that new taxes and higher gasoline prices have not dampened spending. Consumers continue to be resilient and as such, retail sales increased by 0.7 percent in the month of February, despite concerns that they might decline.
"Retail continues to show its importance to the economy," NRF president and CEO Matthew Shay said. "That said, our consumer research consistently shows a cautious shopper that is making tough spending decisions based upon economic uncertainties, lower paychecks and higher prices for things such as gas. This is particularly true among those making $50,000 or less a year."
Seasonally adjusted, retail sales were up 1.1 percent month-over-month and 4.6 percent year-over-year. Of particular note was general merchandise sales, which grew 4.7 percent compared to the same-time last year. Perhaps unsurprisingly, with spring on the way, building material and garden equipment retailers also saw a notable 1.1 percent month-over-month spike in spending.
Adjusting to customers
Part of running a successful retail business is understanding customers and being able to identify trends or patterns. When retailers notice shifts in buying habits, whether it's from their own collected data or a third-party report, they should make the necessary adjustments in their inventory management and procurement strategies.
For example, home maintenance and general merchandise sales took off in February. This could highlight a potential new niche to target, or if businesses already serve that market, they could prioritize it more effectively. In summary, merchants can still increase sales in tough economic times with the right tools to identify product trends, buying behaviors and consumer needs.