Correction: A previous version of this post said March's core retail sales, which exclude volatile food, auto, building materials and fuel sales, fell 0.2% from February 2017. That is incorrect. Total retail sales declined 0.2% while core retail sales increased 0.5%.
Dive Brief:
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The U.S. Department of Commerce on Friday said that total retail sales fell 0.2% from February to March. Core retail sales, which exclude volatile food, auto, building materials and fuel sales, increased 0.5% since February 2017 and are up 5.5% year over year, according to Reuters. E-commerce sales rose 0.6% over last month and 11.9% from March last year.
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By sector, sales of electronics and appliances grew 2.6%, apparel sales rose 1%, sporting goods stores sales fell 0.8% and department store sales ticked up 0.2%. The Commerce department also revised February’s retail sales to a 0.3% decline, after initially reporting it as a 1% rise.
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In another federal government report released Friday, the Consumer Price Index for all items minus food and energy fell 0.1% in March, its first decline since January 2010, according to the U.S. Bureau of Labor Statistics.
Dive Insight:
The economy continues to throw up surprises. Economists continue to believe that consumer confidence remains steady, if marked by uncertainty injected by the political climate, according to the University of Michigan Surveys of Consumers.
“Various factors were at play in the first quarter, but we are again seeing a pattern similar to previous years — consumer spending was weak but is expected to pick up as we move through the year,” NRF Chief Economist Jack Kleinhenz said in a statement.
The first few batches of retail sales numbers come as many brick-and-mortar retailers are facing significant existential challenges to their businesses. Any slip in overall retail sales is only worse for brick-and-mortar retailers, as they continue to lose market share to e-commerce retailers. E-commerce has been taking a disproportionate share of retail growth at the expense of the traditional brick-and-mortar retailers.
The most vulnerable retailers are on thin ice in this environment. Already this year we've seen several retailers — including teen apparel retailer Wet Seal and women's apparel retailer The Limited — succumb to bankruptcy. The number of retailers who have filed for bankruptcy this year — 9 at last count at the end of March — has already equaled the total number of retail bankruptcies for 2016 and is on pace to for the highest year on record since the recession.
In particular, the consumer price index decline was a surprise that suggests that retailers may have trouble boosting prices. “A lack of pricing power continues to plague the retail industry,” Kleinhenz said. “There is no doubt that weak pricing power led to the bumpy period for retailers in the first part of this year.”