Retail Sales
September 27, 2021 | Marcus and Millichap
Core retail sales reverse course in August. Shoppers remained active at the end of the summer, driven by online spending and back-to-school sales. Overall, core retail sales increased by 2.0 percent between July and August, largely due to an increase in nonstore spending of 5.3 percent. More people stayed home in some areas of the country to avoid the challenges associated with the much more contagious delta strain of COVID-19. Others kept away from restaurants, funneling funds into grocery stores, which saw a 2.1 percent rise in receipts during August. Fortunately, positive cases have begun to decline across the South, so more service-oriented spending could occur in the coming months.
Retail real estate well-positioned for recovery. Although many smaller retailers struggled through the recession, the overall market has remained resilient following the downturn. The national unemployment rate has fallen to 5.2 percent, indicative of an improving employment situation. Many retailers are having difficulty filling positions in the current environment. In July of this year, 1.1 million retail trade jobs were available, highlighting the need for more workers. Beyond fueling a need for new hires, the reopening economy also reversed the course of retail vacancy in the second quarter. The availability rate dipped 10 basis points in the spring period to 5.6 percent, 60 basis points above the level recorded in the first quarter of 2020.
Recent home sales benefiting retailers. The pace of single-family housing acquisitions remained strong over the summer, which spurred purchases at furniture stores in August. During the month, sales at such establishments were up 3.7 percent relative to July and 15.6 percent above the same period last year. Spending at building material stores also climbed 0.9 percent last month as new homeowners began to make improvements on their houses. Elevated prices and softening demand for homes could curb future spending in these sectors, however, as fewer buyers are able to enter the market. The outlook in the single-family housing sector remains mixed as interest rates tick higher.
