Not everyone is enjoying the retail sales rally

Underlying the strong retail sales report is a category in decline.

A Nordstrom department store is shown at a shopping center in San Diego, California in this September 10, 2014, file photo. Nordstrom is expected to report Q4 earnings February 18, 2016. REUTERS/Mike Blake/FilesGLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH 'BUSINESS WEEK AHEAD FEBRUARY 15' FOR ALL IMAGES·Yahoo Finance· (Reuters)

Retail sales may have grown 2.5% year over year in May, but this growth was clearly not equally distributed.  Despite this strong overall growth, department store sales actually plunged by an alarming 8.4% year-over-year, continuing a trend that has taken the stocks of companies like Macy’s (M), Kohl’s (KSS) and Nordstrom (JWN) down.

On the other hand, non-store retailers (basically online retailers) showed off stupendous growth by rising 12.2% from May 2015, continuing another trend that has caused the stocks of companies like Amazon (AMZN) to skyrocket.  The picture looks even stronger when you look at year over year growth during the past 3 months, which clocks in at 16%.

The continued growth of nonstore retail sales seems to be a fact of life, with the only noticeable exceptions in growth occurring during the 2007-2008 financial crisis. This growth has also started accelerating again in recent years.

Online sales are surging. (Image: JPMorgan)
Online sales are surging. (Image: JPMorgan)

Similarly, the slow death of the department store is also a long-term trend, having peaked in the early 2000s.  This trend shows even more consistency than the nonstore retail sales growth, with no noticeable rises over the years.

Department store sales are dying a slow death. (Image: JPMorgan)
Department store sales are dying a slow death. (Image: JPMorgan)

Both trends also seem to be intimately related, with Barclay’s pinning the “sluggishness [referring to department sales] to a shift towards online shopping.”  Worrisome for department stores, but great for online retailers.

--

Rayhanul Ibrahim is a reporting intern at Yahoo Finance.

Read more:

A 90-year glance at the two most popular stock market investing strategies

Inflation expectations haven't been this low in decades

Will Ralph Lauren's turnaround strategy work?

Advertisement