Across the globe: A challenging retail picture isn’t unique to the US.
- Retail sales in China fell 6.7% MoM in May, per China’s National Bureau of Statistics.
- That said, China’s May numbers were a marked improvement from an 11.1% MoM decline in April, when millions of residents were confined to their homes due to COVID-19 lockdowns.
Looking ahead: US retail sales (excluding auto) are expected to jump 7.5% YoY during the critical mid-July to Labor Day back-to-school period, per a forecast by Mastercard SpendingPulse.
- But that forecast doesn’t account for inflation, which means the outlook isn’t as optimistic as it seems at first glance.
- Mastercard expects shoppers returning to stores to be a key driver behind that growth, as its forecast calls for in-store sales to rise 8.2% YoY.
- Another important projection is the return of in-person events pushing up apparel sales 8.7% YoY.
The big takeaway: While US consumers have been incredibly resilient throughout the pandemic, they’re starting to feel the impact of prolonged inflation as food and gas prices eat up more of their income.
- The challenging environment is going to force retailers selling discretionary items to find creative ways to drive sales.
Go further: For more on The Era of Uncertainty, read our report here.