If there’s been a buzzword through the past few weeks, called out during earnings commentary and in presentation decks, it’s been this:
Normalization.
Card companies and banks and even some retailers have given the indication that the heights of the pandemic and the post-pandemic age — chiefly in terms of sales surges and splurges, especially online, and underpinned by savings and “dry tinder” on the cards — are behind us.
And by extension, we’re headed towards normalization, and even, in some cases, a dip below pre-pandemic levels. Because inflation and consumer caution are presenting headwinds.
Growth is still growth, both in terms of overall retail sales and in eCommerce sales. But the latest data from the U.S. Census Bureau shows that, per the “Quarterly Retail eCommerce Sales Report,” sales growth continued to slow, markedly, from the double-digit rates that had been seen as recently as the end of 2023.
eCommerce sales in the second quarter of 2024 accounted for 15.2% of total sales on an unadjusted basis. That’s down from the 15.6% contribution in the first quarter of this year, and up from 14.6% in the year ago period.
In terms of the larger picture, the year-over-year (YoY) quarterly growth rate in total sales, as seen in the chart below, has dipped to 1.9%, to about $1.9 trillion. That growth rate is less than half of the long-term average that’s measured between the Great Recession and the pandemic.
In fact the growth is below pre-pandemic levels, even stripping out the timeframe that includes the recession. And though there’s no breakdown by spending category, the read across here is that consumers are flirting with a wholesale return to “flat” or “negative spending.”
To be sure, the second quarter data is, well, the second quarter, and we got a sense just last week with the latest monthly retail sales data — which was up 1% in July, rebounding from previous months — that there’ll be volatility ahead.
And within the overall spending “pie,” eCommerce sales were $282 billion in the second quarter of this year, up 6.6% from last year. But again, there’s a pronounced deceleration in growth, as the increase was less than half of the 14.8% average YoY quarterly growth rates for the period between the Great Recession and the Pandemic. The chart above shows that we’re well below trend, again, for the stretch of spending that had preceded the pandemic — for years.
PYMNTS’ coverage of earnings season has noted some of the pressures. McDonald’s sales fell for the first time since 2020 as lower-income consumers stayed home in the latest quarter. Home Depot eked out a slight revenue gain in its latest report. There’s been a bifurcation in how consumers spend by channel: PYMNTS Intelligence data has shown that 44% of respondents had paid for their most recent retail purchase in stores via debit card, while 28% paid with a credit card. Conversely, 41% of consumers surveyed had paid for their most recent online retail purchase using a credit card. But as we’ve also seen, debit spending is about using the money that is on hand, while credit spending, as evidenced in other government data, has increased less than expected in June, right into the end of the latest quarter. The slowdown looks like it may be set firmly in place.
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