Retailers Begin 2022 on a Strong Note as Shoppers Ramp Up Spending
- Consumers step forward in January. After an early holiday shopping season led to a quieter than normal December, retail spending bounced back last month. Several sectors recorded strong gains, though online retailers and furniture stores posted the largest month-over-month increases at 7.2 percent and 14.5 percent, respectively.
- Retail fundamentals to approach pre-COVID-19 levels this year. By the end of 2022, retail vacancy is anticipated to fall to 5.0 percent, only 10 basis points above the rate at the beginning of the recession. The downturn finally pushed many struggling retailers over the edge, but new businesses are rising in their place.
- Tailwinds for some traditional retailers. The rapidly declining case counts are going to encourage more shoppers to visit general brick and mortar locations in the months ahead. This is especially true for eating and drinking places, which recorded a 0.9 percent decrease in sales month-over-month in January.
True Spending Gains are Cloudy
- Inflation masks actual increase in sales. The consumer price index jumped 7.5 percent on an annual basis last month, largely overstating the increase in retail sales over the past year. A few components are the primary cause of the rise, including gasoline, autos and groceries.
- Broader global reopening could provide lift to spending. Several areas of the world are reducing their restrictions, which should raise sales over the next several months.
*Through January; pre-recession is as of February 2020
Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; U.S. Census Bureau