Consumer Spending Is Up — They Just Aren’t Shopping In Stores

Solid growth in retail sales should presumably be good news for America’s retailers — but as it turns out, those gains only accrued to the few, the proud and the largely digital. Brick-and-mortar retailers, on the other hand, seem to be out in the cold when it comes to the recent growth.

According to the U.S. Commerce Department, retail sales increased 0.6 percent in July from June — a beat on the 0.4 percent gain economists were expecting. June sales were also revised up. That stand-alone fact is good news, since many segment watchers were forecasting a downshift in consumer spending through the second quarter.

But the recent results trickling from around the retail sector — particularly at department store mainstays like Macy’s, Kohl’s and Dillard’s — tell a very different and much less uplifting story.  And the retail blues aren’t just for department stores — Dick’s Sporting goods took a beating on its stock price when earnings came in well below estimates, a fate Advance Auto Parts shared when its Q2 results really failed to warm investors’ hearts.

Amazon, primarily — with a cohort of other digital players — was the signature issue in retailer woes, as non-store merchants saw their sales pick-up 1.3 percent between June and July and 11.5 percent since this time last year.

Also looking strong in the retail segment are areas where goods are larger, bulkier and harder to sell online. Merchants that sell building material and garden equipment stores, for example, have remained fairly solid, according to Commerce Department figures.

Apart from the bad news for physical retailers, the report overall had something of a dark forecast for market watchers. Data indicates that wages are growing slowly, consumers are not saving (indicating they are probably not able to spend much more than they already are) and they expect to pay low prices (and carry supercomputers that make them easy to find).

All of which adds up to a probability that — barring some structural change to the economy — this is as good as it as likely to get for most retailers.

And for those that are struggling right now — that is isn’t good enough.