Dive Brief:​

• U.S. retail sales rose 0.4% in April from March and 4.5% from the year-ago period to $474.9 billion, the U.S. Census Bureau of the Commerce Department reported Friday. Excluding auto sales, April’s retail sales increase was 0.3% including food sales and 0.4% not including food sales. The agency also revised its March report for retail and food sales from a 0.2% decline to a 0.1% rise.

• E-commerce sales rose 1.4% in April and 11.9% year over year, according to the report, suggesting that, while growing, online sales results don’t put much of a dent into overall retail sales.

• Sales fell in April for department stores by 0.2%, furniture by 0.5%, clothing and accessories by 0.5%, and grocery by 0.4%. Store sales rose for electronics and appliances by 1.3%, sporting goods, hobby, book and music by 0.6%, and health and personal care by 0.8%.

Dive Insight:

By many accounts, retail sales picked up in the later part of the first quarter of 2017; J.C. Penney CEO Marvin Ellison made a note of that in his statement on the company’s report Friday morning. Fundamentally, it remains an open question whether the improvements in April will prove to be a bellwether of a rebound in consumer spending.

Economists had forecast overall retail sales increasing 0.6% in April, as core retail sales (excluding more volatile auto, fuel, building materials and food services) rose a much smaller 0.2%, according to Reuters. Excluding foodservice, automotive, and gasoline, core retail sales rose 3% year over year, which GlobalData Retail Managing Director Neil Saunders called “a respectable uplift… only slightly below the average rate of growth over the past year.”

Indeed, Friday’s government report suggests that “not all is gloomy in the world of retail,” Saunders said in a note emailed to Retail Dive. “There is no sign that retail spending is slowing down to any significant degree,” he said. “Such a statement might, at first glance, appear to contradict the tumult of chatter suggesting retail is in crisis. In actuality, both are correct.”

In a report emailed to Retail Dive earlier this week, Retail Metrics analyst Ken Perkins compares retailers' situation to the troubles retailers faced coming out of the Great Recession eight years ago. “The retail industry is undergoing major structural changes that are wreaking havoc throughout the sector,” Perkins said. “Despite being seven years into the current economic recovery with an unemployment rate at just 4.4%, wages on the rise, and a strong housing market, retailers are on their heels, with many fighting for survival.”

While retail is in a state of flux, the source of those difficulties is not mainly due to a major slowdown in consumer spending, Saunders said. “Rather, they are the consequence of a change in where consumers spend that money. As the distribution shifts, it is causing significant pain for the losers and is forcing all retailers to reassess their routes to market. That the root of the problems is not a slowdown in spending is a positive thing. It underlines the fact that there are gains to be made — but only for those retailers savvy enough to adapt and respond.”

Some sectors are better off than others: Department stores are faltering and apparel sales are challenged in part because of softening in the athleisure category. But the trajectory to further growth is “reasonable and steady,” according to Saunders. 

“As much as we do see some forward pressures on household finances, we also see positives from continued low gas prices, relatively full employment, and some modest gains in wages,” Saunders said. “This steadiness in growth is a good thing, if only because a slowdown in spending, coupled with all the structural change occurring in retail, would produce a very real crisis."

Retailers are feeling growth and margins pressures from a variety of fronts, with competition from e-commerce giant Amazon being one of them, Perkins also said. Plus there are “vastly more options for time [and] money use than 10 years ago,” according to the Retail Metrics report, and social media is providing just one of the experiences that younger consumers prefer over the accumulation of goods. Add to that, there are simply too many brick-and-mortar stores in the U.S., Perkins said, as others have.