Retail Sales Growth Slows in September

Retail sales growth slowed in September, according to data released Wednesday morning by the U.S. Department of Commerce, intensifying concern over the health of the sector ahead of the all-important holiday sales season.

Key channels in the apparel sector slowed, but specialty stores continued to gain share from their larger department and discount store competitors.

Total adjusted retail sales were $442.6 billion, down from $444.1 billion in August, representing a 4.2% increase on a 12-month smoothed basis, its smallest increase in seven months. Total retail inventory increased by only 3.6% in August, the most recent month available, resulting in a decline in the inventory-to-sales ratio.

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Automobile sales growth, which for the past four years has been a key driver of retail sales, rose by 8 percent, also its smallest increase in seven months. Retail sales excluding autos rose by 3.2% on a 12-month smoothed basis, less than the overall rate.

Collective sales growth for the various types of stores that sell home products (furniture, appliances, electronics and building materials) slowed to 4.3% in September, from 5.2% in August.

Sales growth at non-store retailers, which consists primarily of e-commerce pure-plays, slowed dramatically to 3.4%, its lowest monthly growth rate since July 2009.

Department, chain and discount stores once again suffered the biggest blow of any major sector, with sales down a smoothed 1.7%. August inventory at big stores plunged by 6.3%, less than July’s drop but its seventh straight month of declines, due primarily to the implementation of omnichannel and inventory management systems that increase inventory efficiency and visibility.

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Apparel specialty store sales rose by only 1.1%, their worst showing in six months. Many chains are reporting no relief from the intensely promotional environment despite a relatively strong response to early fall and back-to-school merchandise. Specialty store inventories edged down by 2.7% in August, resulting in a slight decline in the inventory-to-sales ratio for the sector.

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September’s apparel specialty store sales increase was barely enough to offset the big store decline’s impact on the combined sector. Department, chain, discount and specialty store sales–a reliable barometer of apparel sales—were flat. Inventory for the combined channels dropped by 4.1%, their biggest monthly decrease in more than four years, resulting in a decline in the inventory-to-sales ratio.

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