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 (NYSE: DG), Dollar Tree Inc (NASDAQ: DLTR), Five Below Inc (NASDAQ: FIVE), Ollie's Bargain Outlet Holdings Inc (NASDAQ: OLLI), and Target Corp (NYSE: TGT). 

Best Buy Co Inc (NYSE: BBY), DLTR, Tractor Supply Co (NASDAQ: TSCO), and Walmart Inc (NYSE: 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 (NASDAQ: LULU) rose +17.7% y/y (vs. +8.2% y/y last week), and Nordstrom Inc (NYSE: 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 (NYSE: 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 (NASDAQ: 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 (NASDAQ: ETSY) saw sequential softer but positive indexed spending of +2.7% Y/Y (vs. +6.5% previous week).

Photo via Walmart