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Is Retail Group Too Optimistic?

Although it is true that retail sales for this year are up over last year, the National Retail Federation looks like it may be reading too much into recent research showing more stores being built than are being closed.

NRF says an IHL Group report “offers a thorough and complete debunking of the main false premise supporting the retail apocalypse myth.”

IHL data shows a net rise in store openings of 4,080 in 2017. “In fact, for each company closing a store, 2.7 companies are opening stores,” NRF crows.

However, a quick look at the IHL report reveals that the total includes restaurants – normally left out of NRF’s regular reports on retail sales. IHL finds that table-service and fast-food restaurants are adding a net of 2,754 locations – more than half the 4,080 net gain in “stores” that it cites.

The three fastest growing core retail segments are mass merchandisers such as off-price retailers and dollar stores (+1,905 stores); convenience stores (+1,700 stores); and grocery retailers (+674 stores).

Six days after it issued the press release touting the IHL numbers, NRF announced a revision of its own 2017 retail sale estimate because of recent changes in government economic projections.
Sales are now expected to increase between 3.2% and 3.8%, rather than the 3.7-4.2% the federation forecast earlier this year. NRF says that changes in retail sales numbers made by the Census Bureau and similar revisions to personal income and consumption both affected the forecast.

NRF also reported that August retail sales decreased by 0.2% from July. On a year-over-year basis August sales rose 3.7%. Online and other non-store sales dropped 1.1% from July but rose 8% year-over-year. Hurricane Irma’s impact on sales reports remains to be seen, NRF pointed out.

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