U.S. nonstore retail sales grew significantly slower year over year in January 2020 than in December and for 2019 overall, according to a Digital Commerce 360 analysis of U.S. Department of Commerce advance monthly figures released Friday. Last month, nonstore spending, excluding estimated fuel sales, increased just 6.4%, achieving only about a quarter of December’s record-breaking 24.2% increase and less than half of the 13.9% jump registered in 2019.
Nonstore sales—a proxy measure for ecommerce performance—in January 2020 also rose at the slowest year-over-year rate for the month in six years and was more sluggish than the 11.6% growth in January 2018.
The Commerce Department’s nonstore sales–which are mainly online but include other sales such as orders through call centers, catalogs, door-to-door visits and vending machines–don’t align perfectly with spending captured in the pure ecommerce figures that the agency releases quarterly. But the data is an early indicator of trends in the online sector. Digital Commerce 360 analyzes non-seasonally adjusted Commerce Department data and excludes sales in segments that don’t typically sell online such as restaurants, bars, automobile dealers, gas stations and fuel dealers.
In January, nonstore sales represented just under half—49.2%—of all retail gains, excluding the estimated sales of fuel. This segment typically accounts for two-thirds and sometimes even hovers around three-quarters of spending increases across all channels, so the drop in share is noteworthy.
Total retail sales through all channels increased just 2.5% year over year last month without fuel, nearly half of the 4.9% increase in January 2019. In December 2019, the uptick in all retail spending reached an impressive 6.3%, which was revised down from initial Commerce Department figures, and helped to close out the year with 3.8% growth in total retail sales.
According to Commerce Department data, overall sales were down year over year for a number of merchandise categories: electronics and appliances, health and personal care, sporting goods, and hardware and home improvement. General merchandise stores did well despite a 3.9% decline in the sales of one subcategory—department stores—suggesting superstores, warehouse clubs and dollar stores more than offset the flagging purchases made through old-school retailers. Clothing and accessories sales were relatively flat, with a 0.7% dip.
Spending patterns reflected warmer-than-expected weather across parts of the country, according to Mark Hamrick, a senior economic analyst at consumer financial services company Bankrate.com. Higher temperatures likely decreased demand for winter apparel while giving a boost to home improvement retailers as homeowners weren’t scared off of projects with sub-zero readings, he adds.
Despite the slowdown and the challenging month for some categories, Jack Kleinhenz, chief economist at the National Retail Federation, says January’s retail performance reflects a “confident consumer.”
“The strength of consumer spending continues to be the anchor of the current economic expansion,” he says. “While the business sector continues to weigh significant uncertainties, consumers are providing staying power for U.S. economic growth. We are starting the year on a strong foothold.”
But Hamrick says the potential impact of the corona virus outbreak on retail performance will need to be monitored in the upcoming weeks and possibly months.
“That uncertainty translates to downside risk for the economy, consumer sentiment and spending,” he says. “For now, though, the job market and wage growth have remained firm and inflation has been contained.”
The Commerce Department will release pure ecommerce numbers for Q4 2019 on Feb. 19.