Restaurants and Grocers Lead Subdued Month in Core Retail Spending
Retail sector approaches a junction. Improvements in grocery
and dining-related spending were brightspots in May, when core
retail sales advanced marginally against a backdrop of high inflation.
The recent gains recorded across the two retail segments
occurred alongside declines in home-based purchasing categories,
including furniture, electronics and online spending. This activity
points to a broader shift in consumer behavior away from the consumption
of home goods and toward necessities and some social
experiences. This adjustment has the potential to benefit owners
of net-leased restaurants and grocery-anchored shopping centers.
Dining-related spending reaches record mark. Restaurant and
bar sales in May accounted for their largest share of monthly core
retail sales since the onset of the health crisis at 17.7 percent. Additional
spending was driven by a roughly 9 percent increase yearover-
year in foot traffic at eateries across the nation. West Coast
and Northeast states registered the largest improvements in
patronage, suggesting pent-up demand to socialize exists in these
regions, following some of the most prolonged health restrictions
in the nation. As summer commences, eateries and bars in travel
destinations are poised to note further gains in foot traffic. The
resumption of more business travel and conventions should also
catalyze patronage in metro business districts.