September Retail Sales Stagnated and eCommerce Was Pinched

Core Insights - Wage volatility and paycheck-to-paycheck pressures persist, indicating continued consumer flexibility but limited financial headroom [1][10] - Retail sales in September showed a modest increase, with total sales at $733.3 billion, up 0.2% month-over-month and 4.3% year-over-year, but missed consensus estimates [4][5] - Discretionary spending categories are experiencing weakness, with notable declines in motor vehicles and parts (-0.3%), electronics and appliances (-0.5%), and clothing and accessories (-0.7%) [5][6] Retail Performance - Retail sales data indicates a pullback in discretionary categories related to home and leisure, with sporting goods and hobby stores down 2.5% in September [6] - Essential and value-oriented retail channels are seeing growth, with health and personal care stores up 1.1% and miscellaneous store retailers up 2.9% [7] - Nonstore retailer sales increased 6% year-over-year, but showed a decline of 0.7% month-over-month in September, suggesting a potential wait for promotions [8] Consumer Behavior - The Wage to Wallet Index indicates a 0.81% drop in hourly wages for labor economy workers in October, equating to a loss of approximately $14 billion in annualized spending power [10] - Many consumers are trapped in narrow liquidity bands, relying on short-term credit and making trade-offs among bills, while adapting spending towards value channels [11] - Retailers and payment firms should not assume continued digital commerce growth, as consumer spending remains cautious despite resilience [12] Payment Trends - The importance of value, convenience, and flexibility in payment product design is increasing, with consumers gravitating towards buy now, pay later (BNPL) options and flexible financing [13] - Stakeholders should anticipate uneven cash flows and higher credit use, emphasizing the need for real-time insights into spending patterns [13]