Key takeaways:
- Top-line sales grew at a record pace in September, fed by strong online and in-store growth.
- Spending at consumables-focused retailers improved, signaling that job gains are outweighing lower unemployment benefits.
- Home improvement and sporting goods remained the fastest-growing brick-and-mortar channels as shoppers look to stay busy and safe with outdoor activities. The arrival of winter may dampen some of these sales in the coming months.
- A blurring of late back-to-school and early holiday spending may have triggered a sharp improvement in sales at apparel and department stores after their recovery stalled in August. Sales levels were still lower than a year ago.
- September’s jump in growth may signal a stronger holiday fourth quarter than Kantar forecasts, but early holiday shopping and a change in the weather are expected to mean a stronger first half than second half of the holiday sales period.
Top-line sales for core retail in September grew at their fastest pace on record. Among the channels not included in this core retail measure are restaurants and bars, which posted a 14% year-to-year decline, only a small improvement from the previous month’s 16% decline. (Channel retail sales data from recent months is available at the end of this piece. Kantar Retail IQ clients can access more charts.)
Nonstore vs. brick-and-mortar: Nonstore, including online, grew at an even stronger pace than the previous month. The aggregate brick-and-mortar channel jumped to its highest growth since 2006.
Supercenter, club, and small-format value: This combined channel accelerated to its highest growth since June. Both small-box value retailers and big-box mass retailers likely grew at a stronger pace than they did last September. Data available only for the previous month indicates the small-format value channel (+14%) is leading the brick-and-mortar growth of warehouse club and superstores (+5.3%), but this is partly due to the larger share of online sales at big-box mass retailers that are captured in the online channel.
Supermarket: This channel regained momentum in September as it once again approached a double-digit pace. The stronger nominal growth occurred at the same time that food inflation moderated a bit to around 4%, indicating demand growth strengthened.
Drug, health, and beauty care: Growth in this channel jumped to its highest pace since March. Data from the previous month indicates growth in the narrower drugstore channel was likely much higher than it was last September.
Home improvement: This channel in September remained the fastest growing brick-and-mortar channel by a wide margin. Growth was close to the record pace it posted in June.
Apparel, jewelry, and shoe specialty: Month-to-month growth jumped in September after a flat August. It’s unclear if this trend will continue into the fourth quarter, which is needed since sales in these physical stores were still much lower in September than they were a year ago.
Traditional and discount department: This combined channel mirrored the encouraging trend seen with apparel specialists. Still, it’s unclear if traditional or discount department stores benefited the most from the month-to-month improvement or if this trend can be sustained into the holiday.
