Tough Times Getting Tougher as Inflation Rocks Retailers
In a Special Holiday Edition of Bloomberg Daybreak with Nathan Hagar, Burt Flickinger discussed how Gas prices are affecting everything from Farming to Food to Fashion, and that tough times are getting tougher, with 70% of Consumers living paycheck-to-paycheck. Retailer stocks like H&M are being pounded because people couldn't afford to buy clothes for their kids' First Communion, Christenings, Easter and Passover celebrations, while Easter baskets were smaller as the prices of chocolate and candy prices are up 50% & eggs up 100%.
With inflation, many people can't afford to get married or have children, and are adopting record numbers of rescue puppies & kittens instead, making Petcare the hottest category in retail, up 7%. Inflation is also boosting wholesale clubs, led by BJ’s & Costco, providing savings on gas & groceries & much more.
Unionized food Retailers & Wholesalers are generally higher for 3+ years on the Bloomberg Terminal because unionized companies have pension plans & higher levels of loyalty & productivity, resulting in greater customer satisfaction & sales. This is an indicator that Amazon can perform better as a unionized company both at its Fulfillment Centers & Stores: Whole Foods. It's notable that Employee-owned retailers like WinCo and H-E-B are outperforming significantly too.
Auto Parts, Dollar Store and Convenience are also strong, while the laggards & losers are Teen & Adult, Specialty retailers, Furniture & Sporting Goods. Electronics, Jewelry and Auto sales are contracting because of sticker shock on new & used cars.
As inflationary expectations become more entrenched, Consumers are buying more in bulk at wholesale clubs, switching to Private Label, buying more on promotion & with coupons, and also hoarding & ‘Forward-Buying” essential food, beverage & healthcare items. Shoppers are cutting back at off-price stores like TJX, Burlington and Ross, where they typically buy on impulse. Finally, higher Gas prices are benefiting online retailers, with Macys.com, ranked #7 in overall E-Commerce sales, doing a brilliant job, as well as Kohls.com, with its shop-in-shop affiliated relationships involving Sephora, Amazon & Aldi, and click-and-collect, fantastic online delivery & Curb-side Pickup.