Consumer electronic sales still lag
After two years of binge-buying gadgets and appliances, consumers have unplugged from electronics shopping.
Driving the news: Sales of electronics and appliances are down 9.9% year over year in July, the U.S. Census Bureau reported Wednesday in its monthly retail sales charts.
Context: Overall retail sales in July were 7.8% above last year when excluding gasoline prices, which, although they've dropped sharply in recent weeks, remain much higher than a year ago.
The big picture: Retailers have been stuck with a glut of electronics as Americans are turning their interest toward trips and entertainment with COVID fears easing.
- Electronics chain Best Buy just three weeks ago lowered its sales forecast, warning that it expects its second-quarter same-store sales to fall 13%.
- "I think the biggest explanation is a pull-forward in demand," Bankrate senior industry analyst Ted Rossman wrote Wednesday. "Many people completed home renovations and stocked up on appliances and technology because they were spending more time at home in 2020 and 2021 due to the pandemic."
- He added: "As COVID concerns have eased, many of those dollars are now going to something else, especially services such as travel, entertainment and other sectors that are not captured by this report.”
State of play: It's not helping retailers that consumers are dealing with steep price increases in core items like food and groceries, thus limiting their discretionary income.
- Consumers are prioritizing "spending on essentials and dealing with the higher costs of living more generally," GlobalData managing director Neil Saunders wrote Wednesday.
What's next: Discounts.
- Best Buy last month said it expects "pressure from increased promotional activity in the consumer electronics industry.”
- Home entertainment company WiSA Technologies expects the same. "There's going to be healthy promotions and discounting in the fall," CEO Brett Moyer told investors in a conference call Monday.
The intrigue: Compared to June, sales of electronics and appliances showed a slight uptick of 0.4% last month, marking the first positive monthly reading since April and suggesting that demand may have found a bottom.
What we're watching: Whether July's stability was just a blip.