Inflation is driving most of the sales growth in the retail sector, at least as of August, according to a Colliers foot traffic and sales analysis. Retail sales were up 3.5% year-over-year, but underlying volume growth was only 0.4%.
Core retail, which excludes food, gas and auto spending, rose 3.6% for the month. Modest back-to-school activity aided this growth, said the report. Retailers offered fewer promotions during the month compared with July, causing consumers to turn to online shopping for price comparison and convenience. Online shopping was up 8.2%, which could signal a competitive road ahead for in-store shopping, said Colliers.
Apparel sales jumped 7.6% year-over-year, making it one of the best-performing retail categories. However, foot traffic to clothing stores was up only 4.66% in August. This suggests that higher average transaction sizes and indulgence purchases drove the increase rather than volume. Colliers said locations with desirable, trend-forward inventory saw the most significant increases.
Meanwhile, spending at home improvement retailers fell sharply by 5.7% as projects took a back seat to other seasonal spending. Foot traffic reflected this shift, with visits down 0.4% for the month. Furniture and home furnishing sales and foot traffic grew a modest 2.9%. Much of that activity stemmed from earlier pull-forward activity tied to tariff concerns, according to Colliers.
Experience-based retail cooled in August despite a high level of engagement, the report found. Foot traffic at theaters and music venues plunged nearly 27%, which was the sharpest drop among all retail categories. Dwell times remained high, however, which suggests strong engagement among a smaller audience, according to Colliers.
Restaurant sales ticked up just 0.29% and food store sales rose 2.7% despite flat volumes. This demonstrates heightened caution around food spending amid inflation, said Colliers.
Adidas was the top-performing brand during the month, with average store visits growing 13.6% year-over-year. Michaels followed with a 13.3% increase, with Goodwill and Hobby Lobby both seeing 11.7% gains. GameStop rounded out the top five, enjoying a 10.6% boost in August.
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