New data out this week from the U.S. Commerce Department suggests consumers continue to shift more of their spending on retail products to the web and away from physical stores.
What the Commerce Department calls nonstore sales reached $49.93 billion on a seasonally adjusted basis in February. That’s a 13.0% gain compared to $44.20 billion in February 2016, and an acceleration from January 2017, when nonstore sales increased 12.0% year over year.
The majority of nonstore sales—54.4% as of 2014, the latest year for which data is available from the Commerce Department—occur on the web, but also include other categories of retail outside of physical stores, such as mail and phone orders from infomercials, door-to-door sales and home heating fuel dealerships.
Analysts use the monthly nonstore sales figures to roughly gauge the health of the online retail industry in the U.S., though most acknowledge that the agency’s quarterly report on e-commerce is the most accurate indicator of how fast it’s growing in comparison to other retail sectors. The Commerce Department will report first quarter e-commerce sales on May 16.
In the fourth quarter, U.S. e-commerce sales grew 14.3% to $123.61 billion, versus a total retail sales increase of 3.9% when factoring out items not normally bought online, like automobiles, fuel, and bar and restaurant sales. That growth rate, reported Feb. 17, suggests e-commerce represented 13.3% of total retail sales in Q4.
In the Commerce Department report this week, nonstore sales increases in February occurred despite relative softness in most other areas of retail. Total retail sales, excluding food service and the sale of automobiles, increased 0.1% month over month, versus a nonstore increase of 1.2%. Sales in electronics and appliances stores dropped 2.8% compared with January, and sales of clothing fell 0.5%.
Jack Kleinhenz, chief economist for the National Retail Federation, says overall retail declines likely are due to tax refunds being delayed this year, heavy discounting by many retailers and warmer weather affecting spending patterns.
In addition to the nonstore sales gain, another bright spot in the February report was a big increase in sales of building materials and garden equipment (a 1.8% increase from January, and a 7.3% jump compared to February 2016). Those gains also likely are due to warmer temperatures in February. “We usually don’t see [sales] increases like that,” Kleinhenz says. “March or April is when people usually buy stuff for their gardens and yards, so that is probably related to the weather.”Favorite