Retailers Open More Stores as Sales Increase, Despite Inflation

Retail sales in the United States increased significantly in June despite elevated inflation, or perhaps precisely because of it. Retailers also appear to be responding to the current economic crisis by opening more new stores than they are closing.

Retail sales rose 1 percent from May and 8.4 percent from the previous year, according to the Census Bureau. Comparatively, in May there was a rise of 8.2 percent over the previous year and a monthly reduction of 0.1 percent.

According to the National Retail Federation, which excludes purchases at car dealerships, petrol stations, and restaurants, retail sales increased by 5.8 percent over the previous year and by 0.6 percent in June. The NRF estimated that sales in May were up 6.3 percent annually but down 0.3 percent month-over-month.

As was last observed in the early 1980s, when inflation was as high as it is now, consumers' enthusiasm for buying in the face of increased prices may be a result of inflationary psychology taking hold. Because they believe that goods and services would become more expensive the longer they wait, buyers are partially motivated by this psychology to purchase now rather than later.

According to Coresight Research, retailers are now opening more stores than they are closing in response to inflationary pressure, and they are closing considerably fewer outlets than they were a year ago.

There were 4,328 reported U.S. shop openings during the first half of 2022, compared to 1,912 announced closures. Retailers have collectively announced 58.1 percent fewer closures this year than they did during the same period last year, and 1.9 percent more openings than they did during the first half of 2021.

Discount chains have opened 45% of all new stores so far this year, following a trend of rapid expansion in that industry that began before the current inflation and, in fact, before the epidemic.

Conversely, clothing retailers continue to suffer. According to Coresight, they have been involved in 33 percent of closures so far this year.