Mark Halloran is a director at GRS Group. He can be reached at 646.912.4748 or via email at mhalloran@grs-global.com

We’ve spent a good amount of time in this space pointing out how well the retail industry has performed in the face of a lazy news cycle periodically declaring that “malls are dead,” and people are only interested in shopping online nowadays. Sure, there have been several store closings over the last few years, but discount chains, restaurants and entertainment concepts are making up for much of that lost space.

Well, it’s going to be tough to stay positive if some recent news becomes an ongoing trend.

The U.S. Commerce Department reported that December retail sales fell 1.2 percent from November, suggesting that the holiday season wasn’t as great as formerly suggested. The good news is that December sales did increase 2.3 percent year over year. 

Besides the Commerce Department report, the National Retail Federation (NRF) also had its take. Its analysts said that December sales were down 1.5 percent from the prior month and only increased 0.9 percent year over year. That was quite a contrast compared to November, when sales grew 5.1 percent year over year.

“The combination of financial market volatility, the government shutdown and trade tensions created a trifecta of anxiety and uncertainty impacting spending and might also have misaligned the seasonal adjustment factors used in reporting data,” said NRF Chief Economist Jack Kleinhenz. “This is an incomplete story and we will be in a better position to judge the reliability of the results when the government revises its 2018 data in the coming months.”

The NRF reported some numbers that were surprisingly promising for the overall holiday season when looking at individual retail categories. Some of those included: clothing and accessories stores, up 4.2 percent; health and personal care outlets, up 2.6 percent; and general merchandise (department and discount) stores, rising 2.3 percent. On the other end of that was a 13.5-percent plunge by sporting goods stores, which are experiencing pressure from general merchandise and online sales.

For their part, e-commerce retail sales rose 11.5 percent during the holiday season, according to NRF. Amazon, by far the biggest player in the space, though facing its own headquarters issues, saw its fourth-quarter revenuesincrease 19.7 percent.

Walmart, the largest brick-and-mortar retail company, is forecast by analysts to have a same-store sales increase of 3.1 percent year over year during its fourth quarter.

An issue of concern for others watching the retail industry numbers is the consumer sentiment index. But it performed better than expected in February, rebounding from a dip in January, reportedly due to the government shutdown ending and expectations of low inflation-rate increases and a strong jobs market.

As NRF economist Kleinhenz said earlier, there will be revised numbers for Commerce’s retail sales coming out in a few months. We will see if the shutdown impacted the collection of data for the period, as some have surmised, and if retailers performed better than it seems.

About GRS Group

GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.

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