June Retail Sales Increased as Recovery Continues
Retail sales saw solid growth during June, increasing in most categories on a monthly basis and across the board on a yearly basis as the recovery from the coronavirus pandemic continued, this according to the National Retail Federation.
“Continued growth in June retail sales shows enduring strength in the American consumer,” NRF President and CEO Matthew Shay said. “Heading into the back-to-school season, we expect record sales as families purchase electronics, shoes and backpacks for in-person learning this year. However, as the drop in monthly auto sales indicates, retailers are facing product shortages and supply chain constraints. We urge Congress and the administration to enact meaningful, bipartisan infrastructure legislation that is critical for retailers who depend on a safe, reliable and efficient transportation system to drive further economic growth.”
“We’re continuing to see an impressive recovery,” NRF Chief Economist Jack Kleinhenz said. “The economy and consumption are particularly sensitive to government policy, and the boost we saw from government support earlier in the year is continuing to show benefits. Reopening of both stores and the overall economy has progressed, and even higher prices seen in some retail categories reflecting the push-and-pull of supply chain challenges haven’t proven to be a deterrent to spending. As more people get vaccinated and get out, some of the growth will shift to services rather than retail but there’s enough momentum to support both.”
The U.S. Census Bureau today said overall retail sales in June were up 0.6 percent seasonally adjusted from May and up 18 percent year-over-year. That compares with a decrease of 1.7 percent month-over-month and an increase of 27.6 percent year-over-year in May. Year-over-year increases were unusually high this spring because most stores were closed by the pandemic during those months last year, but some stores had started to reopen by last June. Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.
NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed June was up 0.8 percent seasonally adjusted from May and up 12.1 percent unadjusted year-over-year. That compared with a month-over-month decline of 1.9 percent and a year-over-year increase of 16.5 percent in May. NRF’s numbers were up 19.3 percent unadjusted year-over-year on a three-month moving average.
Sales saw a boost from the annual Amazon Prime Day promotion, which was also joined by many other major retailers. Record-high temperatures in some parts of the country and tropical storms in others may have affected sales, and methodology the Census Bureau uses to adjust results for seasonal variations may have affected the numbers reported by the agency.
For the first six months of the year, sales were up 16.4 percent over the same period in 2020. With the rate of growth expected to slow in the second half of the year, that is consistent with NRF’s revised forecast that 2021 retail sales should grow between 10.5 and 13.5 percent over 2020 to between $4.44 trillion and $4.56 trillion. As with NRF’s monthly calculation, the forecast excludes auto dealers, gas stations and restaurants.
June sales were up year-over-year across the board, led by increases at clothing, electronics and furniture stores, and also up in two-third of retail categories on a monthly basis. Specifics from key retail sectors include:
• Clothing and clothing accessory stores were up 2.6 percent month-over-month seasonally adjusted and up 49.4 percent unadjusted year-over-year.
• Electronics and appliance stores were up 3.3 percent month-over-month seasonally adjusted and up 36.5 percent unadjusted year-over-year.
• Furniture and home furnishings stores were down 3.6 percent month-over-month seasonally adjusted but up 17.5 percent unadjusted year-over-year.
• Health and personal care stores were up 1.6 percent month-over-month seasonally adjusted and up 13.5 percent unadjusted year-over-year.
• Online and other non-store sales were up 1.2 percent month-over-month seasonally adjusted and up 12 percent unadjusted year-over-year.
• Sporting goods stores were down 1.7 percent month-over-month seasonally adjusted but up 11 percent unadjusted year-over-year.
• General merchandise stores were up 1.9 percent month-over-month seasonally adjusted and up 10.7 percent unadjusted year-over-year.
• Building materials and garden supply stores were down 1.6 percent month-over-month seasonally adjusted but up 7 percent unadjusted year-over-year.
• Grocery and beverage stores were up 0.6 percent month-over-month seasonally adjusted and up 3.7 percent unadjusted year-over-year.
Chief Economist Says NRF Revised Forecast Because ‘Great Uncertainty’ Has Transformed Into Clear Recovery
As retailers head into the second half of 2021, the “great uncertainty” that clouded the nation’s economic outlook earlier in the year has transformed into evidence of an unprecedented recovery from the COVID-19 pandemic, National Retail Federation Chief Economist Jack Kleinhenz said today.
“It has become clear that the U.S. economy and retail sales are growing far faster and more steadily than anyone could have expected just a few months ago,” Kleinhenz said. “We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well.”
Kleinhenz’s remarks came in the July issue of NRF’s Monthly Economic Review, which expanded on the reasoning behind the revised forecast NRF issued on June 9 as part of its inaugural State of Retail and the Consumer event. NRF now expects retail sales during 2021 to grow between 10.5 and 13.5 percent over 2020, to a range between $4.44 trillion and $4.56 trillion. That compares with the initial forecast released in February of between 6.5 percent and 8.2 percent growth and a total between $4.33 trillion and $4.4 trillion.
“Our initial forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus,” Kleinhenz said. “Since then, we have seen spending grow, vaccines have become available to virtually anyone who wants one, infections have fallen and additional stimulus in the form of the American Rescue Plan has been signed into law.”
Revising the forecast is something NRF doesn’t take lightly because ups and downs in monthly retail sales figures coupled with multiple revisions and long lags before the data becomes final make it “difficult to separate the signal from the noise,” Kleinhenz said.
But economic data that has come in since February has made it clear that the initial forecast would easily be exceeded. Numbers for the first five months of the year showed retail sales tracking 17.6 percent above the same period in 2020 – a rate of growth likely sufficient to meet or exceed the initial forecast even if sales are flat for the remainder of the year.
In addition, sales have grown year-over-year every month since June 2020, and the $388.6 billion in sales seen during May was the second-highest level on record, topped only by $414.7 billion during the height of the holiday season in December 2020. Gross domestic product already grew at an annual rate of 6.4 percent in the first quarter of this year, and NRF now expects GDP for the full year to grow close to 7 percent. That would be the fastest growth since 7.2 percent in 1984 and far above the 4.4 to 5 percent forecast in February. Personal consumption expenditures, which include both goods and services, are now expected to grow 7.5 percent year-over-year rather than 4.5 percent.
“As the pandemic illustrated so vividly in 2020, we should expect the unexpected,” Kleinhenz said. “But based on the data at hand, things are looking very good for the economy and consumers, and we think it was prudent to update our forecast given the brightening picture.”
2021 Brings Back-to-Class Shopping to Record Levels
Consumers plan to spend record amounts for both school and college supplies as families and students plan to return to in-person classrooms this fall, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics.
“The pandemic forced parents and their school-aged children to quickly adapt to virtual learning, and they did it with an incredible amount of resolve and flexibility,” NRF President and CEO Matthew Shay said. “We enter the new school year with plans to return to the classroom and retailers are prepared to help Americans find and purchase whatever they need to make this transition as seamless as possible.”
Families with children in elementary through high school plan to spend an average of $848.90 on school items, which is $59 more than last year. Total back-to-school spending is expected to reach a record $37.1 billion, up from $33.9 billion last year and an all-time high in the survey’s history. College students and their families plan to spend an average of $1,200.32 on college or university items, an increase of $141 over last year. Over half ($80) of this increase is due to increased spending on electronics and dorm furnishings. Total back-to-college spending is expected to reach a record $71 billion, up from $67.7 billion in 2020.
According to the survey, as of early July more than half (51 percent) of K-12 and college shoppers have begun shopping for the items they will need when classes resume later this year. And 39 percent say they took advantage of recent sale events such as Prime Day, Target Deal Days and Walmart’s Deals for Days to shop specifically for school items.
However, there is still plenty of shopping left to do. The vast majority (76 percent) of K-12 shoppers were still waiting on lists for school supplies as of earlier this month.
On average, consumers reported that they had completed only 18 percent of their back-to-class purchases so far by early July. Among those with at least half of their shopping left to complete, 51 percent said it was because they did not yet know what they will need and 48 percent said they were still waiting for the best deals. Additionally, 43 percent of all back-to-class shoppers say they plan to use money they received from government stimulus to purchase items for the upcoming school year.
While families are planning to spend more on K-12 students in every category, electronics and clothing saw the biggest increases. Back-to-school shoppers plan to spend $21 more on average on electronics this year compared with 2020 and $19 more on clothes. Of those planning to purchase electronics, half (49 percent) plan to buy a laptop, followed by a calculator (32 percent) and a tablet (31 percent).
“Consumers are spending more on items like electronics and clothing as they make plans for students to resume activities in person this fall,” Prosper Insights Executive Vice President of Strategy Phil Rist said. “For those in particular with children in elementary to high school, shoppers are putting the largest portion of their budgets toward electronics, new clothes and accessories.”
While online shopping remains a top destination for back-to-school shopping, families are much more comfortable shopping in store this year than last year during the peak of the pandemic.
The most popular destinations for K-12 shoppers are online (48 percent), department stores (48 percent), discount stores (44 percent), clothing stores (41 percent), office supplies stores (27 percent) and electronics stores (27 percent).
The top destinations for college shoppers include online (43 percent), department stores (33 percent), discount stores (30 percent), office supplies stores (29 percent) and college bookstores (28 percent).
The survey of 7,704 consumers was conducted July 1-July 8 and has a margin of error of plus or minus 1.1 percentage points.
Target Announces Bold New Sustainability Strategy: Target Forward
Target Corporation unveiled Target Forward, the company’s new sustainability strategy that puts its business to use to positively impact both people and the planet. Building on the retailer’s legacy of corporate responsibility and sustainable practices, Target Forward marks a new era in sustainability for the company, as the retailer aims to co-create an equitable and regenerative future with its guests, partners and communities.
Target Forward is anchored to the company’s purpose to help all families discover the joy of everyday life. Through Target Forward, the retailer is focused on restoring and regrowing natural systems, and ensuring its team, communities and partners around the globe can thrive.
“As a company and a member of the global community, it’s imperative for both the health of our business and of our planet that we embrace new ways to move forward,” said Brian Cornell, chairman and chief executive officer of Target. “We know sustainability is tied to business resiliency and growth, and that our size and scale can drive change that is good for all. Target Forward influences every corner of our business, deepens our collaboration with our partners and builds on our past efforts to ensure a better future for generations to come.”
The commitments Target is making with Target Forward work toward three critical ambitions: to design and elevate sustainable brands, innovate to eliminate waste, and accelerate opportunity and equity. Signature goals include:
• By 2030, Target aims to be the market leader for creating and curating inclusive, sustainable brands and experiences.
• By 2040, Target plans for 100% of its owned brand products to be designed for a circular future. Target’s teams will continue designing to eliminate waste, using materials that are regenerative, recycled or sourced sustainably, to create products that are more durable, easily repaired or recyclable.
• By 2040, Target commits to being a net zero enterprise — zero waste to landfill in its U.S. operations and net zero emissions across both its operations and supply chain, inclusive of scopes 1, 2 and 3.
• By 2030, Target aims to build a team that equitably reflects the communities it serves, beginning with its commitment to increase Black team member representation across the company by 20% by 2023.
• Target and the Target Foundation will become even more deeply ingrained within communities, lifting up the voices and unique perspectives of community members to maximize the positive impact they can create together.
Walmart Launches Site to Help Veterans and Military Spouses “Find-a-Future”
Walmart launched a site to help veterans and military spouses, whether early career, mid-career or experienced professionals, “Find-a-Future” and achieve their goals. Walmart associates and non-associates can register for free on the platform, use tools to audit their current skills and experience and connect to the right partners to help future seekers build a roadmap across to success.
Growing veteran businesses and bringing their product or service to market as an entrepreneur
The platform builds on Walmart’s previous commitment to creating opportunities for veterans and military spouses. In July 2020, Walmart achieved its Veterans Welcome Home Commitment of 250,000 veterans hired since 2013. In fact, Walmart hired more than 49,000 veterans and 27,000 military spouses in 2020 alone.
“As we look forward, we’re excited to continue our momentum while also becoming more involved in creating high-quality veteran and military spouse experiences through the platform,” said Brynt Parmeter, senior director for Walmart’s military and STEM programs. “Find-a-Future is the next step for Walmart to serve veterans and military spouses while helping us build relationships across this community.”
Walmart’s external partnerships with the Institute for Veterans and Military Families, the U.S. Chamber of Commerce Hiring our Heroes programs and Student Veterans of America, serve as additional connection resources for veterans. Internal programs, including Live Better U, offer frontline associates access to degree attainment and upskilling coursework for just $1 a day. By bringing all of these resources together through the “Find-a-Future” platform, we can help veterans and military spouses advance their economic opportunities and well-being in so many ways.
Federal Judge Sends Washington’s Below-Cost Medicaid Pharmacy Reimbursement Plan Back to CMS
The Washington State Pharmacy Association, the National Association of Chain Drug Stores, and the National Community Pharmacists Association are pleased that the U.S. District Court for the Western District of Washington has approved a motion filed last week by the U.S. Department of Justice seeking to remand back to the Centers for Medicare & Medicaid Services an unlawful, below-cost Medicaid pharmacy reimbursement plan in Washington state. The pharmacy groups had filed a lawsuit challenging the plan, saying it may jeopardize both reliable patient access to care and pharmacy viability alike. The court order also dismisses the matter without prejudice, which would allow the litigants back into court should CMS falter again in its approach.
In a sharp departure from CMS’ previous position, the Trump administration’s acting CMS administrator had approved this flawed scheme on Jan. 19, 2021, the last day of the previous administration. CMS’ previous position was that Washington’s reimbursement was unlawful primarily because it failed to consider the cost of dispensing. WSPA, NCPA and NACDS sued CMS for the inexplicable and unsupported about-face, accusing CMS of violating its own rules.
With this week’s court order, CMS will reconsider its January decision to approve the Washington state plan, contrary to its own rules and prior determinations. If CMS reverses itself, as it should based on the law and record before it, and disapproves the plan, Washington state should then be required to submit to CMS a new Medicaid state plan amendment, which the pharmacy organizations say should reflect the true cost of dispensing in the state and create a reimbursement rate consistent with federal Medicaid rules.
“Pharmacies are essential sources of health care, ensuring the safe and appropriate use of medications through their highly trained pharmacists and technicians. The Medicaid pharmacy dispensing fee must support patient care for our state’s most vulnerable population,” noted Jenny Arnold, CEO of the WSPA. “We celebrate CMS upholding the importance of patient access to quality care by remanding the state plan agreement.”
“This is a precedent-setting fight that we have engaged in to protect vulnerable Medicaid patients and the viability of pharmacies’ work on their behalf,” said NACDS President & CEO Steven C. Anderson. “The court’s swift action is an extremely positive step in reversing a completely unjustifiable approach to Medicaid pharmacy reimbursement in Washington state and to the Trump administration’s response to it in one of its final actions. This sends a vivid message throughout the nation.”
“Pharmacy reimbursement rates can’t be haphazard shots in the dark; they must consider the actual pharmacy costs associated with filling patients’ prescriptions,” said NCPA CEO B. Douglas Hoey. “The federal government formally rejecting this plan is a terrific development for patients and pharmacies in Washington and across the country. Officials should be on notice that you cannot get away with an unfair reimbursement rate.”
Kroger Announces Leadership Changes
The Kroger Co. has announced the retirement of Steve McKinney, senior vice president of retail divisions, after more than 40 years of distinguished service, effective August 7. McKinney will be succeeded by Valerie Jabbar, currently group vice president of center store merchandising.
McKinney began his career with Kroger in 1981 as a clerk for Florida Choice Supermarkets, a former Kroger banner. While there, he advanced to store manager, buyer and field representative before moving to Fry’s Food Stores, where he held several leadership positions before being named vice president of operations in 1998.
McKinney also served as vice president of operations for the Southwest division and vice president of operations for the Ralphs division. He was named president of the Fry’s division in 2013 before assuming his current role as senior vice president of retail divisions in 2018.
“Steve is an accomplished leader who has inspired generations of associates to achieve excellence while mentoring many into leadership positions. As a leader who worked in numerous positions and took on new responsibilities, he also committed to the mentoring and development of any associate interested and willing to grow with the company,” says Rodney McMullen, Kroger’s chairman and CEO. “We thank Steve for his dedication throughout the years and wish him all the best in retirement.”
Valerie Jabbar, Group Vice President of Center Store Merchandising, Named Senior Vice President
Jabbar, currently group vice president of center store merchandising, will succeed McKinney, upon his retirement.
Jabbar joined the company at Fry’s as a store clerk in 1987. She held several leadership roles at Fry’s before moving to the Mid-Atlantic division in 2012 to serve as vice president of merchandising. In 2013, she was named vice president of merchandising for the Ralphs division and was then promoted to president of that division in July 2016. She was promoted to group vice president of merchandising in 2018 before being named to her current role as group vice president of center store merchandising in 2019.
In this new role, Jabbar will oversee several retail divisions across the company.
“Valerie is a dedicated leader who provides strong results through her passion for people – both associates and customers. Her proven success of building highly motivated teams and executing with excellence will foster an energy and commitment to continue delivering a full, fresh and friendly experience for every customer in the divisions she will lead,” says Mary Ellen Adcock, Kroger’s senior vice president of operations. “Valerie’s 34 years of experience with the company bring a deep understanding of the business and will provide yet another valuable perspective among our senior leadership team.”
Jabbar is a board member for the Network of Executive Women. She was twice recognized by Progressive Grocer as a Top Women in Grocery recipient, first in 2012 as a Rising Star and most recently, in 2021, as a Senior-level Executive. In 2018, she was named West Woman of the Year by the Shelby Report, received the California Conference for Equality and Justice Humanitarian Award, and was designated as the USC Marshall School of Business Food Industry Executive Program Executive in Residence.