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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.

22_06 Retail Sales Research Brief
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