Retail sales projections are as key of an economic indicator as any other in today’s logistics world

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In covering the freight transportation and logistics sectors for a decent amount of time, one thing I have learned is that there are myriad economic indicators that industry stakeholders keep a close eye on when gauging the state of the economy.

These things include: consumer confidence (a fluid metric to be sure), new housing starts, auto sales, industrial production and manufacturing data, and volume and tonnage data from the different modes of freight transportation we cover, including trucking, rail, intermodal, ocean (which provides a direct read on import and export activity), and air.

But when one considers that nearly 70% of economic activity focuses on consumer spending, it only raises the importance, and relevance, of good, old retail sales numbers—and for good reason. Retail sales are a direct, and largely current, barometer of economic activity, more so than the aforementioned consumer confidence, which really gauges how consumers “feel” about the economy at a given moment, with feelings and sentiment able to quickly change based on just about anything.

That leads me to numbers issued today by the National Retail Federation (NRF), focusing on retail sales projections for 2018.

NRF expects 2018 retail sales to head up 3.8%-to-4.4%. And it added that online i.e. e-commerce and other non-store sales, which are included in the cumulative forecast tally, are projected to head up 10%-12% annually, with NRF’s forecast numbers excluding automobiles, gas stations, and restaurants.

With 2018 in the early innings, and spring training only a matter of weeks away, it helps to better put the year’s forecast into better perspective by looking at what happened in 2017.

For 2017, retail sales saw a 3.9% annual gain over 2016 to $3.53 trillion, based on the U.S. Census Bureau’s preliminary estimate. NRF said that number is subject to revision while it topped the NRF’s forecast for growth between 3.2%-to-3.8%.

With the state of the economy in a decent place at this point, it is worth noting that really has been the case for more than a while, with steady retail sales gains in recent years over all, coupled with recent signs of improving GDP and what some 3PLs and shippers are calling a “global synchronization” of the economy. What’s more, the recently enacted tax reform bill is doing its part, too, it seems, with companies indicating they plan to reinvest into their operations and some giving employees bonuses, with a decent chance that welcomed bonus money goes into retail sales.

That was made clear by a top NRF executive in a statement announcing its 2018 retail sales forecast.

“The underpinnings of the economy are very good and consumer spending is at the center of our outlook,” NRF Chief Economist Jack Kleinhenz said. “The push and pull of forces both external and internal to the U.S. economy will continue to provide challenges, but on balance we expect a good year. And as the retail industry continues to transform, retailers will leverage the new tax plan to invest in their employees, stores and new formats that engage with the ever-evolving and demanding consumer.”

All good points to be sure. Not to mention, that based on recent earnings calls from publicly-traded freight transportation and logistics services providers, which are also echoing a theme of a healthy economy, specifically a healthy economy buoyed by strong retail sales, which had various executives touting the gains in revenue stemming from things like increased e-commerce activity, which has had a direct impact on things like last, or final, mile logistics, and the ongoing build out and development of warehouses and distribution centers that are needed to help meet increasing demand and uptick in service to meet that higher demand.

What’s more, sentiment like this only reinforces just how connected the many links of the supply chain are as they relate to retail sales and consumer activity. The nearly 70% of total economic activity being directly related to consumer spending bears repeating, as it is a very significant number and needs to be viewed as such. In the freight transportation and supply chain world, it clearly is.

While the NRF’s numbers are estimates at the end of the day, that does not by any stretch render them irrelevant. In fact, I would make a gentlemen’s bet that 2018 retail sales come in above of that estimate. Guess we will have to check back in early 2019 to see what happened. 

About the Author

Jeff Berman, Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Importing and managing the logistics of your precious freight is no easy task. Compliance to U.S. Customs & Border Patrol is essential to your cargo clearing customs. Use a freight forwarder to lower your chances of having shipment delays and to oversee all of your international freight logistics. Contact a customs broker to file your ISF and issue any pre-alerts to avoid penalties and delays, and arrange your ocean freight and imports customs clearance.

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