US retail sales rise 8.7% Year-over-Year

US consumer spending maintained positive momentum in February, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment.

Overall retail sales excluding auto increased 8.7% year-over-year (YOY) and were up 17.3% compared pre-pandemic spending (2019). This is slightly above January growth levels.

When looking across channels, in-store grew 10% in February compared to the same month last year and 8.0% vs. pre-pandemic as consumers resume in-person activity.

E-commerce sales in February were up 4.4% year-over-year and 85.9% vs. pre-pandemic as the shift to digital remains a persistent yet slowing trend.

In January, US retail sales excluding auto increased 7.2% YOY, with online sales growing 10.4% compared to January 2021. Despite the shadow of Omicron and elevated inflation, consumer spending was buoyed by pent-up savings, wage growth and the continued re-opening of the “experience economy.”

The elevated level of inflation is reflected in the February retail sales increases; other key trends include:

Return to office attire: Apparel (+37.6% YOY / +34.3% pre-pandemic) and Department Store (+26.3% YOY / +3.4% pre-pandemic) growth rates remained elevated for the month as consumers prepare to return to physical offices, updating their wardrobes after nearly two years of working remotely.

In-store growth rates rallied: As noted, in-store growth rates rallied through much of February, up 10% compared to last year and 8.0% vs. pre-pandemic. Contributing factors include the fact that heavy winter storm activity suppressed in-store sales in large portions of the U.S. this month last year, as well as the fact that many Covid restrictions were removed this month.

Home décor discounts: Furniture and Furnishings sales spiked in February around the traditional President’s Day weekend, driving growth rates +10.8% YOY and +17.9% compared to pre-pandemic 2019 levels for the month.

Restaurant resurgence: Restaurant sales (+39.4% YOY / +24.2% pre-pandemic) continued to outperform in February with growth rates in the 30-40% range across most states.

“Despite inflation, consumers are putting their record savings to work and expressing themselves through fashion again – much to the benefit of the Apparel, Department Store, Luxury and Jewellery verticals,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated.