Grocery retail sales climb 7.5% in September

Lifted in part by inflation, grocery sales grew 7.5% year over year in September amid a double-digit gain in overall U.S. retail sales, the U.S. Census Bureau reported.

In advance estimates released Friday, September U.S. retail and foodservice sales totaled $625.42 billion (seasonally adjusted), up 0.7% from August and 13.9% from September 2020. Retail trade sales — excluding motor vehicles and parts stores, gas and repair stations — grew 0.8% sequentially to $553.03 billion in September and rose 12.2% from a year earlier.

Grocery stores saw an 0.7% month-to-month sales increase to $67 billion (adjusted) in September 2021, the Census Bureau said. Sales at all food and beverage stores edged up 0.7% to nearly $76.78 billion, with the sector up 7% year over year.

The September results marked lower sequential growth but a higher year-to-year gain versus August, when grocery store sales (adjusted) rose 2.3% from July ( 2.2% for all food and beverage stores) but increased 6.6% from August 2020 ( 6.3% for food and beverage stores).

Year-to-date through September 2021, food and beverage store sales were up 2.8% to $661.74 billion (unadjusted), including a 2.1% uptick to $590.99 billion at grocery stores over the nine-month period.

During September, consumer spending shifted toward merchandise from services, according to the National Retail Federation.

The National Retail Federation (NRF) said Friday that U.S. retail sales grew again in September despite industry and shopper concerns about the COVID-19 Delta variant, supply chain disruptions and rising inflation. During the month, consumer spending shifted toward merchandise from services such as dining, entertainment and travel, NRF noted.

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“The reopening of the economy was interrupted by COVID-19, and consumer spending other than retail hit a speed bump toward the end of summer. Consumers remained active, but retail sales didn’t reflect as much of a shift away from goods to services as expected,” according to NRF Chief Economist Jack Kleinhenz. “That was a plus for retail because consumers still have a hyper-ability to spend, thanks to wage and job gains and the household savings built up during the pandemic. In addition, some back-to-school spending may have spilled over from August into September because of school districts that delayed opening until after Labor Day. Overall, the September report is very promising for a strong finish for the year.”

NRF reported that core retail sales — excluding automobile dealers, fuel stations and restaurants — inched up 0.7% (seasonally adjusted) in September from August and rose 11% (unadjusted) from September 2020, compared with gains of 2.4% month-to-month and 12.2% year over year in August. Through September, NRF said its numbers were up 10.7% (unadjusted) versus a year ago on a three-month moving average.

Related:Rising grocery prices gnaw at shopper loyalty

More shoppers returning to brick-and-mortar stores helped propel retail sales growth in September, according to Naveen Jaggi, president of retail advisory services at commercial real estate firm Jones Lang LaSalle (JLL).

“For many consumers, there is a pent-up demand for in-person shopping and experiences after the hiatus brought forth by the pandemic,” Jaggi said in a statement. “From September 2020 compared to September 2021 shows an increase in retail sales for each kind of business. These results show consumers are feeling comfortable returning to in-person shopping compared to this time last year.”

NRF said September sales advanced in all but two categories (electronics/appliance stores and health/personal care stores) on a monthly basis and increased across the board year over year, led by gains in apparel ( 22.5%), electronics/appliance ( 17.3%) and general merchandise ( 14.1%) stores. In September, grocery and beverage stores posted growth of 0.7% sequentially (seasonally adjusted) and 7.4% (unadjusted) from a year ago.

“Nonetheless, rising inflation and slower supply chains remain a concern,” NRF’s Kleinhenz added. “Spending might have been higher if not for shortages of items consumers are eager to purchase.”

The inflation factor

Escalating prices have continued to impact U.S. shoppers. In September, the Consumer Price Index (CPI) rose by 5.4% (unadjusted) year over year and by 0.4% sequentially, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday. Food pricing climbed 4.6%, reflecting increases of 4.5% for food at home and 4.7% for food away from home.

BLS noted that the indexes for food and shelter, combined, contributed more than half of the monthly overall CPI increase on a seasonally adjusted basis. From August to September, the food index was up 0.9% — the largest sequential increase since June — and reflected upticks of 1.2% for food at home and 0.5% for food away from home. That compared with a 0.4% rise in the August food index, with the same percentage increase for food at home and away from home.

About 84% of consumers polled by BofA Global Research said they are now seeing higher prices in grocery stores.

All six major grocery store food group indexes — meats, poultry, fish, and eggs; fruit and vegetables; cereals and bakery products; dairy and related products; nonalcoholic beverages; and other food at home — saw both month-to-month and year-over-year increases in September, BLS reported

“According to our Barometer survey, 76% of consumers are expecting to pay higher prices for food and beverage products this year versus 62% in April,” BofA Global Research analysts Bryan Spillane and Peter Galbo said in a food-and-beverage sector research note this week. “In addition, 84% of respondents noted they are seeing higher prices in grocery stores now, which is up from July.”

Consumer data specialist Numerator noted that inflation remains top of mind for many shoppers. In Numerator’s September consumer sentiment survey, 79% of respondents expressed concern about rising prices on essential goods and services, and 61% were worried about price hikes by restaurants and travel services. Similarly, 61% cited concerns about product and supply shortages.

Yet NRF President Matthew Shay thinks September’s retail sales data show consumers aren’t holding back spending.

“We expect this to continue,” Shay said in a statement on Friday. “Despite persistent challenges related to the global pandemic, supply chain and labor shortages, retailers and their partners have shown resilience and ingenuity in getting the workforce, goods and systems in place to serve their customers and the communities where they operate.”

JLL’s Jaggi said September’s retail sales increase indicates that many consumers already may have begun making their holiday purchases. “JLL’s recent holiday survey results reveal more than half of shoppers will start shopping before Thanksgiving, compared to 43.2% last year,” he reported. “Last month, clothing stores, general merchandise stores, sporting goods, hobby, musical instrument and book stores saw an increase in retail sales, showing a positive sign for this holiday season.”