Sporting Goods and Health Sectors Provide Bright Spots Amidst Small Overall Declines
By Jonathan Silver, CEO of Affinity Solutions
Following a weak January, February’s year-over-year (YoY) figures are up. The CNBC/NRF Retail Monitor, powered by Affinity Solutions showed total retail sales grew 3.38% and core retail sales (excluding restaurants, auto and gas) up 4.11%, both seasonally unadjusted YoY.
Although this suggests overall consumer resilience, there is growing concern that American consumers might be reaching their spending limits – especially as anxieties around inflation and the cost of non-essential goods grow. Also contributing to broader economic uncertainty were announcements of major tariffs on goods from China and Canada by President Trump.
February 2025 revealed a slight month-over-month (MoM) drop, with total retail sales (excluding auto and gas) down by 0.22% MoM. Core retail sales also fell by 0.22%, both seasonally adjusted.
Looking at the February numbers across a few key categories helps provide a more detailed picture of where consumers are most likely to spend (or not spend) in the coming months.
Health Habits and Hobbies Drive Growth
One notable category was Sporting Goods, Hobby, Music & Book Stores, which saw a 3.57% YoY growth in February and a 0.93% MoM increase. This sector may have benefited from consumers still focused on New Year’s resolutions to get fit and try new hobbies as well, as a desire to engage in indoor activities during the winter months.
YoY growth at Health and Personal Care stores remained robust at 8.33% in February with continued demand for health and wellness products, and a slight declining of 0.44% MoM. Consumers are prioritizing physical well-being, mental health, and self-care, with sustained interest in vitamins, supplements, and fitness equipment. This category was a strong performer throughout 2024, thanks in part to social media influencers touting wellness products and professing the benefits of self-care and healthy living. These retailers are well-positioned to capitalize on self-care trends throughout 2025.
Electronic Sales Dip as Consumer Caution Grows
The Electronics & Appliances category had a negligible 0.06% YoY decrease and a slight 0.43% MoM decline in February. This category may continue to struggle in 2025 as consumers reign in their discretionary spending, and tariffs disrupt imports from China, Canada and Mexico. According to a recent CNBC report, “a 60% tariff on China could cause laptop and tablet prices to increase by 45%, video game consoles by as much as 40% and smartphones by up to 26%.”
Further, the Consumer Technology Association found that the purchase of laptops and tablets could decline close to 70%, while smartphone sales would drop 37% due to tariffs, while consumers in the U.S. would have $90 to $140 billion in lower purchasing power.
In its most recent earnings report, Best Buy cited that deal hunters were a major driver for sales during the holiday season, reinforcing the need for retailers to focus on delivering value for money to attract price-sensitive consumers. Focusing on innovative marketing strategies and attractive promotions will be critical to driving sales in the coming months.
Home Furnishings Seek Spring Recovery
The Furniture and Home Furnishings category saw a 1.01% MoM decline and a more significant 3.67% YoY decline in February.
While President’s Day sales provided some relief, this sector could experience additional pressures with potential tariffs looming. Fewer than 10% of shoppers expect to see no impact in their shopping habits as a result of tariffs. To deal with potential price increases, consumers will look for sales, use coupons, or simply forego any discretionary spending.
Retailers in this sector should leverage strategic promotions and extended discounts around key shopping events to stimulate consumer demand. They may see some relief as longer and warmer days approach and consumers start sprucing up their outdoor spaces.
How Retailers Can Prepare for Tariff Headwinds
As consumers continue to navigate 2025, they are already exhibiting a mix of caution and resilience in the wake of steep tariffs and increased prices.
With consumer sentiment dropping from 71.7 in January to 64.7 in February – and already down to a staggering 57.9 in March – smart retailers will stay nimble and adapt quickly to capture consumer dollars and drive growth in an ever-shifting retail environment. Ultimately, retailers who understand these trends can prepare for these challenges by enhancing their loyalty programs and offering targeted discounts to best position them for success.
