Most Retail Sectors Hold Steady; e-Commerce Regaining Double-digit Growth

Sales in most categories remained mostly flat in July 2010 compared WITH the same month last year, in contrast to the sharper growth of first quarter and the more moderate growth of second quarter 2010. That’s according to summary results provided by MasterCard Advisors’ SpendingPulse, a macro-economic report tracking national retail and service sales.

“Overall, retail sales continued to tread water, following the pattern set with June’s sales, when consumers demonstrated a reluctance to make larger purchases, and instead, traded down,” said Michael McNamara, SpendingPulse VP of research and analysis. “Particularly, we are noticing some weakness in industry sectors that rely on higher-priced ticket items such as furniture, and discretionary areas such as luxury and jewelry. We are also seeing this pattern echoed in the restaurant business, where we have seen consumers shift from full-service restaurants and particularly fine dining, to limited-service and quick-service outlets.”

But e-commerce, a sector that has posted gains throughout 2010, regained double-digit growth in July, increasing 10.9 percent on a year-over-year basis, in contrast to June, when, for the first time since November 2009, it had dipped into single digits. Almost all e-commerce subcategories posted year-over-year growth, the exception being that of department stores, which was down by 1.9 percent following seven months of double-digit growth.

The SpendingPulse Luxury Index encompasses high-end sales in restaurant, food stores, department stores and high-end general apparel retailers. In July, the category saw a small gain, growing 0.2 percent year over year. This essentially flat performance is a notable contrast to the double-digit growth the sector enjoyed from February through April 2010, or even the high single-digit growth of May 2010, compared with 2009.

SpendingPulse also examined a few specific industry sectors, including the hotels and restaurants in specific markets along the Gulf of Mexico.

Overall, the BP oil spill seems to have had a severe impact on the local hotel sector, while the local restaurant sector has not been hit as hard. Pre-oil spill hotel and lodging sales were showing year-over-year increases of 12.9 percent, while post-spill, the sector showed year-over-year declines of 25.5 percent. The restaurant sector demonstrated more resilience, with the full-service category generally flat compared with 2009, while the limited-service sector posted growth.

While the economic impact on these local markets was in some cases severe, the spill doesn’t seem to have had a noticeable impact on the aggregate national retail sales results.

Purchase, N.Y.-based MasterCard Advisors provides payments consulting, information, analytics and customized services to financial institutions and their merchant partners worldwide.