Amid moderating inflation and rising wages, March spending data highlights the continued durability of the American consumer.
By Jonathan Silver, CEO of Affinity Solutions
Spring is finally here and with it has come some distinct spending patterns across categories as the weather gets warmer, and sales come and go.
We saw a year-over-year (YoY) increase of 2.72% in total retail sales in the March 2024 CNBC/NRF Retail Monitor, powered by Affinity Solutions. When adjusted for seasonal fluctuations, monthly sales rose by .36% compared to February. Core Retail sales saw a similar positive trend, with a YoY gain of 2.92% and a month-over-month (MoM) gain of 0.23%.
Overall, March’s retail performance underscores the resilience of consumer spending against a backdrop of moderating inflation and rising wages. But how did these factors, happening at the start of spring, impact specific categories?
After a President’s Day Boost, Durable Goods Are Back To Steady Declines
Durable goods, which includes Furniture, Electronics, Appliances, and Building Supplies, is often viewed as a bellwether of the economy. Unfortunately, after some growth last month, the durable goods sector returned to its pattern of steady declines. This was influenced by various factors, including seasonal purchase cycles and severe weather conditions impacting consumer behavior.
For example, the electronics and appliances category experienced the most significant decrease in spending compared to the prior year and month vs. all other categories. It declined by 5.92% YoY and 2.27% MoM. Furniture and home furnishings were close behind with a drop of 5.28% YoY and 1.46% MoM. These MoM declines are expected after last month’s President’s Day sales, which resulted in a spike in consumer spending. The more significant YoY downturn, though, is likely a result of high mortgage rates and escalating prices, prompting consumers to redirect their discretionary budgets elsewhere.
The Spring Break Gas Paradox
As gas prices fluctuate, spending at gasoline stations reveals how consumers are reacting. The national average price for gas on March 29th was $3.53 per gallon—an increase from both the previous month and year. However, despite the rise in gas prices, spending at gas stations decreased 3.75% year over year and 1.17% month over month. This is a counterintuitive outcome, suggesting that people are driving less.
That may be due to the early arrival of Easter in March, shifting Spring Break earlier, leading to altered driving habits as more people travel in ways other than by car. With gas prices traditionally rising in spring and consumers returning to their regular patterns, an increase in spend at gasoline stations should be anticipated in the coming months.
Online Retail Surges In March From Big Spring Sale
Non-store retail outlets, including giants like Amazon, continue to dominate consumer spend, registering a sizable 15.47% YoY growth. This exceptional continuing growth highlights the ongoing preference consumers have for convenience.
Looking at MoM, this category saw 2.48% growth, attributable in part to Amazon’s Big Spring Sale. Occurring March 10-25, Amazon’s Big Spring Sale drove a 10.6% increase in sales compared to the same period in 2023, underscoring Amazon’s adeptness at capturing consumer wallets in traditionally slower shopping periods. However, while impressive, spending during Amazon’s Big Spring Sale was 32% less than Amazon Prime Day in July last year and 23.1% less than Amazon Prime Deal Day in October, illustrating the impact of different sale events on consumer purchasing behavior.
Overall, we’re seeing retailers navigate a competitive landscape by strategically adjusting prices, which in turn, has driven the sustained consumer engagement we’re observing, especially in strong-performing sectors like non-store retailers, sporting goods, and health and personal care. The consistent year-over-year growth signals a positive trajectory for the retail sector as it aligns with evolving economic conditions.
