MNI ANALYSIS: Conflicting Retail Industry Data Hard To Assess

By Vicki Schmelzer

     NEW YORK (MNI)   - Retail has been a mixed bag recently, with conflicting

data sets making it difficult to assess relative strength or weakness in the

industry. 

     On Friday, the National Retail Federation (NRF) reported that the retail

industry saw a small decline of 900 jobs in August.

     The NRF data "excludes automobile dealers, gasoline stations and

restaurants," the report said, which is why it is different from the small gain

reported in "retail trade" by the Bureau of Labor Statistics. 

     "Despite the slight decrease, the three-month average of 185,000 job gains

combined with July's personal income and spending release confirm solid economic

momentum and should provide retailers positive guidance as they gear up for the

upcoming holiday season," said NRF Chief Economist Jack Kleinhenz.

     "August has a history of being a quirky jobs report. The data must adjust

for teachers returning to school with different start dates, along with summer

jobs winding down at various times. This makes the seasonal adjustment difficult

if not tricky. The initial release is often below trend and subject to

subsequent revisions," he said

     The NRF report noted "that retail job numbers reported by the Labor

Department don't paint an entirely accurate picture of the industry because they

count only employees who work in stores while excluding retail workers in other

parts of the business like corporate headquarters, distribution centers, call

centers and innovation labs."

     A report, released Thursday by global outplacement consultancy Challenger,

Gray & Christmas, noted that U.S. based employers announced plans to reduce

payrolls by 33,825 in August, which was a 19.4% increase from 28,307 in July and

5% higher than the same month last year, when 32,188 job cuts were recorded. 

     "Although job cuts have risen this month, they continue to be significantly

lower compared to the same time last year," said John Challenger, Chief

Executive Officer of Challenger, Gray & Christmas, Inc.

     "Although we have seen high layoffs in retail with store closings and some

companies filing for bankruptcy, there has also been increased hiring in new

areas of the sector as retailers build out their e-commerce platforms, he said.

     This week, the IHL Group published a new report "Debunking the Retail

Apocalypse," stating that "retailers and restaurants are opening 4,080 more

stores than they are closing." 

     On the breakdown of net 4,080 opens in 2017 for chains with more than 50

locations, 1,326 net opens were in core retail segments and 2,754 net openings

were for restaurants, the report said. 

     Retail sales are up $121.5 billion through the first seven months of 2017,

which is "about the size of the annual retail trade for The Netherlands," IHL

said. 

     The report noted that for every company closing stores, 2.7 others are

opening stores. 

     "For Core Retail segments, 487 chains are opening stores vs 206 who are

not, or an average 43% of brands opening more stores vs 18% that are closing

stores; 39% of retailers have no net change in stores for the year," IHL said. 

     The top five chains to expand stores are Dollar General, Dollar Tree,

7-Eleven Couche-Tard and Aldi and the top five chains to shutter stores are

Radio Shack, Payless Shoesource, rue21, Ascena and Gymboree. 

     IHL noted that only 16 retailers represent 48% of the reported closings in

2017. 

     The report observed that the retail industry has adapted to new trends over

the years and will continue to do so. 

     "In 1992, the U.S. Retail Economy (with motor vehicles) was $2 trillion. By

2000, it had grown to $3.3 trillion. For 2017, Total Retail and Food Services

Sales (with motor vehicles) is on track for $5.775 trillion," IHL said. 

     This goes hand in hand with the steady rise in U.S. population, from 256

million in 1992 to 323.1 million at the end of 2016, the report said. 

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com

[TOPICS: M$U$$$,M$$FI$,M$$FX$]