from the Nov. 21 Monday Morning Kickoff newsletter from Tematica Research
The headline figure for retail sales and retail sales ex-auto figures from the October Retail Sales Report came in better than expected. Reported retail sales for October registered a gain of 0.8 percent, beating expectations for a 0.6 percent improvement, while retail sales ex-auto for October rose 0.8 percent, outpacing expectations for 0.5 percent.
Digging into that report as we like to do, we discover where consumers were really spending during October. Compared to October 2015, retail strength was registered at nonstore retailers (+12.9 percent), health and personal care stores (+8.3 percent), building material and garden (+6.5 percent), which outpaced overall retail sales gains of +4.3 percent (+4.0 percent if we exclude autos). The two categories that continued to post year-over-year declines in sales were department stores (7.3 percent) and electronics and appliance stores (4 percent).
Our take on the above, and juxtaposing the performance of nonstore retail vs. department stores and electronics and appliances, is that it’s yet another data point for the accelerating shift toward digital commerce at the expense of bricks-and-mortar stores. Yes, we said another data point, because when we take a longer-term view, the shift is rather striking.
Over the trailing three-month period of August to October 2016 vs. the same period in 2015, we see nonstore retail sales rose more than 12 percent year over year vs. declines of 6.7 percent and 4.3 percent for department stores and electronics and appliances, respectively. Longtime readers will no doubt recognize this is a positive for our Connected Society and Cashless Consumption investing themes.
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