Retail Trends Unwrapped: Analyst Unveils Surprising Shifts In Consumer Spending As 2023 Looms

KeyBanc Capital Markets analysts presented proprietary credit/debit card spending trends across Consumer/Retail and Internet Retail sectors.

Consumer/Retail: Analyst Bradley Thomas said this week’s data through December 24th shows indexed spending for the 'All Retail' category increasing 18.4% y/y. 

For the first three weeks of December (excluding the most recent week), average indexed spending rose 0.4% y/y, slightly decelerating vs. 1.3% increase for November. 

Excluding the most recent week, Broadlines/Hardlines indexed spend average increase was 8.8% for the first three weeks of December vs. 4.6% in November, writes the analyst. 

The analyst writes that over this important weekend, outperformers posted a strong acceleration, which includes Dollar General Corp DG, Dollar Tree Inc DLTR, Five Below Inc FIVE, Ollie's Bargain Outlet Holdings Inc OLLI, and Target Corp TGT. 

Best Buy Co Inc BBY, DLTR, Tractor Supply Co TSCO, and Walmart Inc WMT saw a positive acceleration.

The analyst expects easier comparisons in 2024 but projects hardlines trends to be impacted by an unwinding of pandemic-related spending patterns (in home-related areas) and weakness in discretionary categories such as macroeconomic uncertainty, inflationary pressures, and restrictive financial conditions.

Looking ahead, the analyst projects a risk of slower discretionary spending trends due to the resumption of student loan repayments. 

Internet Retail: Analyst Ashley Owens says that the movement remains mixed for the week ending December 24th but sees positive accelerations due to the inclusion of an additional weekend shopping day before Christmas relative to last year. 

In the apparel segment, Lululemon Athletica Inc LULU rose +17.7% y/y (vs. +8.2% y/y last week), and Nordstrom Inc JWN witnessed sequentially improved negative indexed spending of +20% y/y this week (vs. -3% y/y last week, inclusive of JWN Direct (online)).

Also, Nike Inc NKE experienced positive indexed spend trends of +21% y/y (vs. +6.2% y/y last week)

In the e-Commerce segment, The RealReal Inc REAL witnessed a reversal in trends to negative indexed spend of -29.7% y/y (vs. an increase of +6% y/y last week), and Etsy Inc ETSY saw sequential softer but positive indexed spending of +2.7% Y/Y (vs. +6.5% previous week).

Photo via Walmart