People out shopping in the post christmas sales

The Delta variant and supply chain issues are having an impact on consumer activity.

Retail sales were $617.7 billion in July, marking a decline of 1.1% since June,

according to a monthly report from the US Census Bureau. (Sales were up 15.8%

compared to July 2020.) Sales were lower than estimates of a 0.3% decline expected

from Dow Jones.

Clothing and accessories sales were up 43.4% from July 2020, with food services and

drinking up 38.4%.

In June, consumer spending rose month over month, suggesting that consumers

were ready to became less hesitant about spending as the pandemic eased up. The

dip in July suggests an impact from the Delta variant as well as shipping and supply

chain disruptions across the industry.

To deal with the spread of the variant, some stores have revisited their mask

policies and recommendations for customers and employees. Target now requires its

employees to wear masks and recommends that customer wear them. Walmart

recommends customers wear them as well. Port congestion and shipping disruptions have also been major headaches for brands

and retailers this quarter. Freight rates have reached record highs amid

pandemic-related shipping slowdowns, factory and store shutdowns, clogged ports

and worker shortages. As a result, prices on certain items have increased.

According to the Bureau of Labor Statistics’ monthly report, consumer prices rose by

5.4% in July versus a year ago. Footwear prices still showed significant increases, but

at a slightly slower pace than a month ago.

According to a monthly Global Port Tracker report released by the National Retail

Federation and Hackett Associates, imports at the country’s largest retail container

ports will hit record-highs in August.

Despite the headwinds, the National Retail Federation is optimistic on the outlook

for future industry recovery.

“July retail sales showed slight deceleration in spending, but nothing to derail our

outlook for a record year,” NRF president and CEO Matthew Shay said in a statement.

“Though the delta variant is presenting health challenges while supply chain

disruptions along with unfilled job openings are presenting business challenges, the

consumer and broader economy continue to display steady strength aided by

advanced tax credit payments and strong gains in the labor market and personal

incomes.”