Retail Sales. Here's What's Hot, What's Not, and Why Restaurants Matter More Than You Think

Headline retail sales are back on track, beating expectations and proving that consumers still have their spending mojo going. Sales excluding autos and gas grew 4.9% year-over-year, bouncing back after a slow January and February. This puts us right back on track for the steady 4-5% growth we’ve seen for the past year.

But let’s dive into the winners and losers (and the one category we need to keep an eye on).

E-commerce is on FIRE! Growth accelerated to 11.3% year-over-year, the fastest pace in five quarters. No surprise, Amazon is leading the charge and you can read more about it here and here.

General merchandise stores are also celebrating, with sales up 5.7% year-over-year.

Now for the Not-So-Hot Stuff...

Sporting goods are still hungover from the post-COVID rush. Sales are slowing down year-over-year, and trends are diverging at the two biggest players. Dick's Sporting Goods is winning with trendy brands like On and Hoka, while Academy struggles with its focus on budget-conscious shoppers.

Furniture: Things are looking a little wobbly here too. While furniture sales did improve a bit month-to-month, the long-term trend is slowing down. Lower-priced furniture seems to be doing alright, thanks to demand for new starter homes. But those high-end showrooms? Not so much.

The Big Kahuna: Restaurant Sales

Now, listen up, because this is important. Restaurant sales are like the fortune teller of retail. They give us a sneak peek into how consumers are feeling overall. Unfortunately, March’s numbers weren’t exactly a Michelin star performance. Growth didn’t pick up and even slowed on a two-year comparison. Restaurant chain Darden mentioned continued weakness with budget-conscious consumers. Since the second quarter is usually strong for restaurants, any further slowdown would be a red flag that consumers are tightening their belts.

Despite the strong headline, Retail is a mixed bag, with some stores celebrating and others feeling the pinch. Keep an eye on those restaurants – they might be the canary in the coal mine for the consumer spending slowdown.

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