When retailers and manufacturers look at what’s happening across U.S. retail, beyond their own industries and categories, it’s easy to focus on the latest data and disregard the longer-term, macro-level view. Reviewing weekly or monthly sales revenue data can make it seem like everything is changing very suddenly, sometimes masking the larger business implications.  

But widening the lens to look at the retail business on a quarterly basis offers a different perspective. Those sizeable momentum shifts level out, revealing the true trajectory, along with recovery pathways for sectors that continue to struggle. 

“Decelerated savings levels, increased inflation, and the resulting diminishing consumer demand levels are leading to a pullback in U.S. retail spending,” said Marshal Cohen, NPD’s chief retail industry advisor. “We are coming out of phase where the consumer’s needs dominated, but now the rising cost of living is leaving its mark.” 

Accelerating, Maintaining, Improving, or Declining 

We’ve leveraged our Retail Early Indicator point-of-sale data to illustrate specific verticals’ momentum in the first two quarters of this year. They fit into four discrete categories: 

  1. Accelerating – Industries growing faster in the second quarter 
  2. Maintaining – Industries that grew in the first quarter and continue to grow 
  3. Improving – Industries declining slower than or equal to the first quarter 
  4. Declining – Industries declining faster than or equal to the first quarter 

Tracking Retail Recovery, Industry by Industry 

The path to success for any retail business can shift in a very short time depending on retail and consumer volatility. Disruptions may include consumption shifts, inventory challenges, variations in recovery from early pandemic supply-chain issues, consumer responses to inflation and declining savings levels, and more. Today’s retail market is certainly challenging, with some industries chasing goods, while others still have too much inventory. That’s why navigating quarterly changes is both tricky and necessary. 

“Even as the pandemic continues, most consumers are living their lives as normally as they can, but the definition of ‘normal’ continues to change in the retail world,” said Don Unser, NPD’s chief retail strategist. “The constant shifts in how consumers shop and what they choose to buy makes this quarter-over-quarter view helpful. It can reveal things about the future that looking at shorter timeframes can’t.” 

Read on to get a deeper look at several industries mentioned in the chart above. 

Beth Goldstein

Beth Goldstein,
Executive Director, Industry Analyst 

Accessories continued to grow in the second quarter of 2022, compared to last year. As promotional activity picked up, momentum slowed, primarily due to the decline in average price growth. Luggage remained the strongest category in terms of sales revenue. It was the only category in the second quarter where unit sales increased, as pent-up demand for travel led to an increase in purchasing. Summer promotional activity will likely keep luggage sales in the positive zone in the third quarter. Backpacks will be up against soft comps because “spring back-to-school” sales in 2021 cannibalized the traditional back-to-school season in this category.  

Beth Goldstein

Beth Goldstein,
Executive Director, Industry Analyst 

Footwear sales revenue was slightly softer in the second quarter of 2022, compared to the first quarter. This softness was caused by slowing average price growth in apparel resulting from increased promotional activity. In addition, we saw a decline in performance footwear sales revenue and unit sales, both of which were flat in the first quarter. In the third quarter of this year, promotional activity will be a headwind for prices, although we’ll still see average price growth versus last year. Summer retailer events will jumpstart fall selling in some fashion categories, but back-to-school activity will shift the focus back to sneakers.  

Leen Nsouli

Leen Nsouli,
Executive Director, Industry Analyst 

The first half of 2022 brought growth to the retail office supplies industry, driven by accelerating sales revenue growth that stemmed from janitorial and breakroom supplies and writing instruments. Janitorial and breakroom sales grew 10% in the first quarter of 2022 and rose 13% in the second quarter, compared to 2021. Conversely, sales revenue from stationery and craft supplies has been challenged, as product demand to set up home offices or hybrid work environments has declined. There are hot spots in the industry driving consumer unit demand, including products related to activities, projects, and collaborative learning and working. These may reflect a move toward more tactile and hands-on projects in the classroom or at home, alongside the continuing shift toward technology for working and learning.  

It is important to note that even with the increased usage of technology, teachers are buying the same amount or more supplies, shown by our Future of Office Supplies report. Barring no changes in the momentum of workers moving back to offices and students back to classrooms, demand for supplies, combined with rising industry prices, are expected to translate into office supplies growth for the back-to-school season. Industry sales revenue, excluding janitorial and breakroom and storage, is anticipated to grow 6% year over year in the third quarter. 

Kristen Classi Zummo

Kristen Classi-Zummo,
Director, Industry Analyst 

Apparel demand is cooling after a strong showing in 2021. The pullback in apparel in the second quarter was the result of various economic and social factors that were playing out with the consumer. Many people replenished their casual wardrobes last year, resulting in a decline in categories like activewear and basics in 2022. Suits, dresses, and other dressy apparel are driving growth as consumers get back to events and in-person work. Rising prices across the board are also affecting apparel and other discretionary categories, causing consumers to think twice about clothing purchases.   

Looking ahead to the third quarter, we anticipate a good back-to-school season — the first time kids are definitely going back to in-person learning in over two years. As kids are typically last to feel the spending pullback, parents will buy them back-to-school wardrobes. However, the timing of these purchases might shift. The increased cost of school supplies and other back-to-school items could cause consumers to postpone apparel purchases. As most parts of the country remain warm through September, kids can get through the first few weeks of school in their summer wardrobe. Delaying apparel purchases may be a financial decision consumers will need to make. Increased inventory and softening demand will also likely lead to more promotions in the third quarter, especially compared to last year.   

Mat Piscatella

Mat Piscatella,
Executive Director, Industry Analyst  

In the second quarter of 2022, the percentage decline in physical video game spending eased due to slightly improved new-generation console hardware availability compared to the first quarter. This increased availability helped lessen the decline accessory spending has been experiencing. New video game console hardware, particularly PlayStation 5 and Xbox Series X, continue to be supply-constrained in the U.S.  

Despite the easing of declines in hardware and accessories, physical and digital at retail content spending declines have accelerated due to a lighter release slate of new premium content. 

The third quarter will be subject to the same uncertainty around console hardware supply that has been in effect since the launches of the PlayStation 5 and Xbox Series consoles in December 2020. The spending shortfall when compared to 2021 is expected to continue, however a surge in new hardware supply could surprise. 

Stephen Hinz,
Director, Industry Analyst  

Juvenile product sales slowed in the second quarter this year, compared to last year. We started to comp against vaccine optimism, which led to large increases within the travel category as families felt more comfortable leaving home. There is also more competition for consumers’ wallet share, with average selling prices (ASP) higher than during the pre-pandemic period — and rising. This ASP rise could be due to multiple factors, such as price increases, promotions, and product mix. Parents are experiencing consumable supply-chain issues with baby formula shortages; this has had a secondary effect on some subcategories across the juvenile feeding category.  

Looking at the third quarter, there will be continued slowing as we come up against the monthly child tax payments that started in July last year. This shift could put pressure on spending power for parents making less than $100,000 per year. We might see parents make more financial trade-off decisions in the coming quarter when it comes to aspirational or status brands. However, we did see birth rates rise more than 1%. If that continues into 2022, it could help offset some of these headwinds. The juvenile products industry is made up of necessities that new parents need, so it’s a given that they will continue to buy and nest.  

Juli Lennett

Juli Lennett,
Vice President, Industry Advisor 

While the toy industry performance in the second quarter this year is posting growth, after first-quarter declines, it’s important to understand what is driving that divergent shift. The declines in the first quarter of 2022 can be directly attributed to two major events in the first quarter of 2021. First, the release of two stimulus checks last year contributed to very strong growth in the toy industry as many parents spent those funds on toys — we were comping against that strong growth this year. In addition, Easter toy sales — an important event for toy sales — moved from the first quarter of 2021 to the second quarter of 2022, pushing volume from the first to second quarter this year. This shift in the timing of Easter also explains the strong growth in the second quarter.  

However, what is important to consider is that consumer demand has slowed while average selling price (ASP) continues to surge. With consumer demand already slowing down, inflation on the rise, and parents having essential financial demands placed on them for back-to-school shopping, the toy industry could experience a more impactful, yet temporary, pull-back until we get to the other side of the back-to-school season. 

Nathan Shipley

Nathan Shipley,
Executive Director, Industry Analyst 

The retail automotive aftermarket demonstrated resiliency throughout the pandemic as consumers turned to their garages for do-it-yourself projects. Coupled with the freedom car ownership provides, families turned to their personal vehicles to take road trips near and far. Others bought RVs, boats, or other motorized equipment for recreation, and the aftermarket benefitted as a result. More recently, while topline dollar sales have remained positive, unit sales have declined, as pre-COVID behaviors have come more into the spotlight and separately, higher gasoline prices have impacted spending on vehicles.  

Product pricing has been a very hot topic: the aftermarket is at the top of the list of NPD’s tracked industries when it comes to average price increases. The average increase this year has been over 15%, with the most recent weeks up almost 20%. This change has been driven by numerous merchandising and consumer factors including inflation, promotional and mix changes, new assortments, and other factors. 

Joe Derochowski

Joseph Derochowski,
Vice President, Industry Advisor

The first two years of the pandemic were a boon to home product sales, but as consumers started spending more time outside their homes, there was a diminishing need for them to buy home products. This, along with the absence of stimulus funds this year and a colder spring impacting home comfort in many areas, helps explain why industry sales declined in the first two quarters of this year, compared to last year.

As we start to compare year-over-year sales against the third quarter of 2021, when consumers started spending more time outside their homes again, we can expect comparisons to be more favorable. We’ll begin to see a bump in product sales due to more weddings, students on campus for college, and the return of Prime Days in the third quarter. We will also see products related to convenience and food portability as people return to the office and school and increase group entertaining at home.

Going forward, we also anticipate a shift in sales of housewares and small appliances as we start to compare sales against a more typical lifestyle than last year. Small appliances and housewares should increase in the third and fourth quarters compared to early in the year, in part because of tdeclining kitchen electrics sales starting to normalize.