Speciality retail – January report

The volume of retail traffic in January remained at its greatest level in the previous seven months.

Briefly describing the key issue:

‍Retail traffic increased by 45.1% on an annualized basis in the second week of January, down from 53.6% in the first week of 2022, although it continued the growth patterns that started at the end of December 2022. Although it decreased somewhat from the first week of January, U.S. apparel traffic, at + 50.0% year-over-year, was still very near its seven-month high.

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Retail evaluation

‍After rocketing by 53.6% year over year in the first week of the year, U.S. retail traffic increased 45.1% in the second week of January. Additionally, the second week did not do well in comparison to 2019: in the second week of January this year, the number declined by -1.8%. These are still positive results compared to 2022, since there was a holiday boost in retail sales at the end of December that persisted until the middle of the first month of 2023.

The amount of retail trade in the US was greatly impacted by holidays. It was + 49.3% on average in the first two weeks of January compared to the same time in 2022, a considerable improvement from the December average of -14.4% year over year. Retail traffic in the United States increased by an average of +5.2% in November, which was the monthly minimum for 2022, +6.1% in October, +10.4% in September, and +8.3% in August. The growth of all U.S. retail traffic was -26.9% YoY on average in 2022, but it slowed down considerably in the second half of the year compared to the first.

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Examination of the clothes market

The second week of January continued the general retail market's upward trend, with U.S. apparel traffic up 50.0% year over year. This is a steady decline from the first week's + 56.7% year over year growth, but it is still significantly higher than the 2022 lows that were attained in the fall of 2022. In the second week of January, US apparel traffic increased 25.6% compared to the same period in 2018, while it increased by 38.0% in the first week.

Clothing traffic often increases steadily in January; in the first two weeks of 2023, it averaged + 53.4% on an annualized basis in the United States, which is much higher than the average of + 18.9% in December 2022. This indicator's average value increased from a lower value in September (+ 5.2% on an annualized basis) to a higher value in October 2022 (+ 6.0%). Compared to July, this number dropped by approximately five times in August: on an annualized basis, August saw an increase of 2.4% vs July's increase of 12.6%.

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Is the weather important?

‍The weather may have contributed to the rise in retail on an annualized basis as the second week of January 2023 was significantly warmer and wetter than the same time in 2022. In addition to being +7.2% higher above the historical average, the average temperature was +4.2° higher than in 2022. The second week of January saw 51% more precipitation than the same period last year and 6% more than usual.

In the United States, the third week of January is likewise marked by a rise in retail traffic, which is Typically 20–30% on an annually basis. That's in part because customers continue to return after the holiday season. Weather Trends International ("WTI") reports that the third week of January was the third hottest week nationwide since the middle of the 1990s. However, storms across California and the southwest of the United States are another feature of the week. As a result, the temperature drops, which may be excellent for some winter retail product categories.

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