March Retail Sales from the Census Bureau will be reported next week, and we expect another slower month following February’s deceleration. Culprits to ongoing deceleration include the large pull-forward into January (unprecedented clearance activity), persistently high inflation in grocery, the abatement of emergency SNAP/EBT benefits, year-to-date tax refunds down low-double-digits, unfavorable weather in February/March, the SVB Banking Crisis, and ongoing geopolitical turmoil. Additionally, we are lapping a stronger period last March that was fueled by consumers moving beyond Omicron. As shown in the traffic trends above, home improvement appears to be experiencing the largest deceleration of the categories shown in the chart, which is in-line with the increased price-sensitivity of the home improvement shopper that we pointed out in late February and potentially a moderation in Pro customer visits amid higher interest rates (larger projects often require bank financing). Also, of note, we expect “value” to be the distinguishing factor between brands as that is where non-affluent households are shopping as Placer.ai data shows for off-price versus department stores.
