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January’s Retail Sales Slump Raises Questions About US Consumer Strength
The start of 2024 has brought with it a noticeable dip in retail sales, sparking debates about the enduring strength of the U.S. consumer. January witnessed a 0.8% decline in retail sales to $700.3 billion, a drop more significant than the 0.3% predicted by economists, thus challenging the optimistic sales trends seen throughout 2023.
This downturn was notably marked by a decrease in sales even when excluding automobile purchases, with a 0.6% fall against an anticipated 0.3% increase. Adding to concerns, December’s initially positive retail figures were revised downwards, highlighting a broader trend of consumer caution entering the new year.
Economists like BMO’s Jay Hawkins express concern over this trend, suggesting it may indicate a shift in the consumer’s ability to drive economic growth. Despite this, the National Retail Federation (NRF) remains optimistic, attributing the January sales slump partly to weather disruptions and a shift in spending toward services.
Both Wells Fargo and Morgan Stanley analysts anticipate a softening in retail sales throughout 2024 but remain confident in the U.S. consumer’s resilience, bolstered by a strong job market. This mixed picture points to a complex consumer landscape, where spending may moderate but not entirely retreat, suggesting that January’s figures might not fully capture the trajectory of consumer behavior for the year.
Target Adjusts Self-Checkout Strategy Amid More Shrinkage issues
In a strategic pivot aimed at reducing inventory loss, Target is reportedly adjusting the operational dynamics of its self-checkout stations. According to recent insights from Business Insider and Fast Company, some Target stores are seeing reduced hours for self-service checkouts, while others are implementing item limits at these stations. This nuanced approach reflects the retail giant’s ongoing battle against shrink and theft, challenges that retailers nationwide are grappling with.
Brian Harper-Tibaldo, a Target spokesperson, shed light on the initiative:
“In select stores, we are piloting a number of tests to determine their impact on the overall guest experience. These tests vary by location.”
The move to modify self-checkout operations is a testament to Target’s proactive stance on retail challenges. By carefully evaluating the effectiveness of these adjustments through pilot programs, Target aims to strike an optimal balance between loss prevention and customer satisfaction.
Don’t expect this topic to go anywhere. As the evolving landscape of retail operations changes, where technology and customer service intersect with the practical realities of loss prevention. As Target navigates these changes, the outcome of its strategy could offer valuable lessons for retailers everywhere on managing self-service technologies while enhancing security measures.
Amazon’s Historic Q4 Earnings Set New Benchmarks in Retail
Amazon’s latest Q4 earnings have set a new high, marking its most profitable quarter ever with significant service speed improvements and reduced costs for the first time since 2018. Without disclosing Gross Merchandise Value (GMV), industry estimates suggest Amazon’s global GMV for 2023 ranged between $700 billion to $750 billion, with the U.S. accounting for roughly 73% of this figure. This growth signifies an addition equivalent to Best Buy’s entire 2023 sales.
This performance has allowed Amazon to claim 23.6% of all U.S. retail growth, demonstrating its colossal impact on the market as Core Retail sales rose by 3.6% to $5.13 trillion in 2023. With other retail brands’ Q4 earnings on the horizon, the retail industry watches closely as these giants continue to shape consumer preferences and the competitive landscape.
What we’re talking about
How Important is Valentine’s Day for Retailers? A 5 Year Traffic Study
it’s time to explore the importance of Valentine’s Day within the retail industry, delving into consumer behavior, spending trends, and the holiday’s impact on sales across different retail categories.
Companies Were Big on CBD. Not Anymore
A lack of federal regulation and a mishmash of state laws have made selling products featuring the cannabis-derived ingredient not worth the trouble.
Macy’s to shutter 150 stores amid focus on luxury
Department store will close dozens of outlets this year and the rest over a three-year period after issuing muted trading outlook
Walmart to buy Vizio for $2.3B as annual revenue climbs 6%
The company reported double-digit growth in its advertising unit for the year, while e-commerce sales surpassed $100 billion.
IKEA US CEO Shares 2024 Strategy to Blend Retail, Payments and AI for Shopper Appeal
In a recent interview with PYMNTS, Javier Quiñones, IKEA U.S. CEO and chief sustainability officer, sheds light on IKEA’s strategies for 2024, revealing how the retailer is staying at the top of consumers’ minds.
Get involved
Our VP of marketing James Ewen (who also writes this email!) will be joining Planalytics for a webinar covering Q4 trends in retail. Join via this link.
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