WASHINGTON — Department stores and discounters struggled with weaker consumer demand in June, but specialty stores managed to continue luring in consumers, the U.S. Commerce Department’s monthly retail sales report showed Monday.
Sales at department stores fell a seasonally adjusted 0.7 percent in June to $15.1 billion compared with May, while sales at general merchandise stores declined 0.2 percent to $52.5 billion in June. Apparel and accessories stores, on the other hand, posted a 0.2 percent increase in sales to $19.7 billion in June.
On a year-over-year basis, sales at apparel specialty stores increased 3.5 percent in June, while sales at department stores fell 3.2 percent and sales at general merchandise stores declined 0.3 percent.
“Retail sales continued to stall in the month of June, as consumers held off on discretionary and nondiscretionary spending, marking three consecutive months of retail sales decreases, implying that persistently high domestic unemployment, stagnant job growth and international economic unease have taken a toll on American consumers this spring,” said Matthew Shay, president and chief executive officer of the National Retail Federation.
Despite that, Shay said consumers might be taking a temporary break on shopping to save for the back-to-school season in July and August.
Kevin Regan, senior managing director at FTI Consulting, said he was surprised at the drop in general merchandise sales year-over-year and noted that apparel and accessories stores are “not necessarily immune” from the slowdown in consumer demand, but they are “not getting impacted as hard as some of the other categories.”
Regan said consumers are still shopping, mostly for bargains, as evidenced by online sales, which are up 11 percent.
“People continue to move into shopping online,” he said. “That continues to grow in the double-digit area, despite all of the weakness in some of the categories and despite the fact that consumers are more subdued and the economy is still in somewhat of a stagnant state.”
In the overall economy, retail sales fell 0.5 percent to $401.5 billion, below economists’ expectations of a slight gain in June.
“This report is in line with poor job numbers, declining consumer confidence and a volatile stock market,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “Consumer news has been mostly negative with the sole exception of declining pump prices. The American consumer is not in a healthy state. Most households face strong headwinds.”
Christopher said IHS is forecasting that consumer spending, adjusted for inflation, will be 1.1 percent in the second quarter, “significantly lower than the first quarter’s 2.5 percent gain,” adding that consumer spending and confidence “will not show meaningful gains until job prospects show more promise, and, unfortunately, the back-to-school shopping season is not looking very bright.”