August Same-Store Sales Review

A few things are self-evident when looking at the same-store sales reports for August. 

The first thing is that the discounters continue to post the best results on a comparative basis.  The second thing is that consumers are targeting their spending on things they need as opposed to things they want.

The most important consideration, though, isn't as self-evident.  If one message is to be heeded in the reports, it is that consumers continue to spend.

The media, remember, has had the U.S. consumer six feet under for most of the year now as the fixation on falling home values, rising food and gas prices, a soft labor market, and tighter credit conditions have long been considered the nails in the consumer's coffin.

So, here we are again after the August reports with the media emphasizing how lackluster the total results were while failing to acknowledge the important point that we're still seeing growth. 

It isn't great growth, but its growth nonetheless.  The International Council of Shopping Centers reported August same-store sales rose 1.7%, which is the "worst" showing since March when same-store sales, due to a calendar shift that brought Easter much earlier this year, declined 0.5%.

It is true that discretionary spending has been curtailed, but even low-price leader Wal-Mart said flat panel TV sales fared well in August.   The point being that consumers aren't buying staples exclusively.

Cynics will undoubtedly call attention to the August growth rate being less than the growth rates seen in May (+3.0%), June (+4.3%) and July (+2.6%), which were underpinned by the arrival of stimulus checks.  That's fine, but don't forget that these are the same cynics who looked at the March decline, and gas prices pushing toward $4 a gallon, and said real GDP was destined to turn negative. 

Last week it was reported that Q2 real GDP grew at an annualized rate of 3.3%.

No one can deny that consumers have many challenges. Same-store sales for August would have been stronger if not for the macro headwinds they face.  Growth, though, is still growth no matter what type of negative spin you try to put on it.

--Patrick J. O'Hare, Briefing.com