Retail Rebounds During Second Quarter Despite often complex, conflicting and controversial news stories about the government, politics and foreign affairs, US retail sales (excluding motor vehicles & parts & gas stations) increased a significant 11.0% during Q2 2018, compared to Q2 2017. The substantial increase in Q2 2018 retail sales propelled the first half of 2018 to a 4.9% increase, totaling $2.06 billion, compared to $1.85 billion for the first half of 2017. Not surprisingly, retail e-commerce sales recorded a double-digit increase of 10% during the first half of 2018, but it didn’t seem to affect in-store sales appreciably.

Small-Business Owners Are Generally in a Good Position The Q2 2018 Wells Fargo/Gallup Small Business Index survey was +106, just one point less than Q1’s 107. To retain and/or attract well-qualified employees, 59% of surveyed SMBs said they are likely or somewhat likely to increase workers’ 2018 salaries. According to the ShopKeep 2018 Small Business Pulse report, 23% of respondents said they want to open a new location and 88% said a primary business goal during the next 3 years was to increase sales. When asked how they would like to use capital assets during 2018, 19% of SMBs said inventory; followed by expansion, 17%; marketing/advertising, 15%; equipment, 11%; and online presence and renovation, 10% each.

April Improved on March and Q1 Performance Retail sales for Q2 2018 started with an acceptable MOM increase of 0.4% for April and a 4.7% YOY increase compared to April 2017. April was a welcome improvement over March and the entire first quarter in which consumer spending increased the least during almost 5 years. RetailNext’s April Retail Performance Pulse of brick- and-mortar stores mirrored the month’s less-than- spectacular sales increase, with negative YOY traffic of -7.8%. Despite less traffic, Shopper Yield, or sales divided by traffic, increased 2.5%.

May Was the Best Month of the Quarter Consumers did their best to make May a better month than April, with a 1.3% MOM increase, which was the best monthly performance since last November, and a 5.9% YOY increase. Economists projected a 3.5% increase at an annualized rate of consumer spending during Q2 2018, which is significant improvement from Q1’s annualized rate of +1.0%. RetailNext’s May Retail Performance Pulse report of brick-and-mortar stores revealed decreases in sales, or -2.6%, and traffic, -5.4%; however, Shopper Yield was even better than April’s +2.5%, increasing 3.1%.

June Was a Good Month, But Same-Store Sales Weak June 2018 retail sales were not quite as robust as May, but still increased 0.5% MOM and 6.6% YOY. Core retail sales, which is a better measurement, increased 0.3% MOM and 6.4% YOY. Despite the good news, economists predicted another metric, same-store sales, would increase 2.7% during Q2, compared to 2.9% during late June. Some experts said many retailers weren’t responding to consumers’ demand for more experiential shopping. In RetailNext’s June Retail Performance Pulse report, Midwest brick-and-mortar stores performed the worst with negatives in important metrics: sales, -3.2%; traffic, -2.3%; and average transaction value (sales divided by transactions), -0.7%.

Many Retail Sectors Still Shaky Retail bankruptcies were worst during 2017 than any Great Recession years and 2018 is likely to match 2017, as J. Crew, Nieman Marcus, Sears Holdings, 99 Cents Only, GNC and Fred’s are rated at least a 50% probability of bankruptcy. Although SMBs were very optimistic, according to the Q2 2018 Wells Fargo/Gallup Small Business Index survey, 27% didn’t expect tax reform to benefit their business, 21% expected a future benefit, 12% had already benefited and 39% didn’t know yet. Home sales during June 2018 were the worst for years, with existing homes sales decreasing 0.6%, which account for 90% of the market, and new single- family homes sales decreasing 5.3%, which account for the other 10%.

Advertising Strategies Although retail sales improved significantly during Q2 2018, late summer is the time for retailers to be fully focused on Q4 and the holiday selling season to grab their maximum share of new customers, total sales and transactions per customer visit. Although a very small percentage of SMBs indicate they rely on TV to improve their business performance in the ShopKeep 2018 Small Business Pulse report on page 1 of the Profiler, you can offer the best combination of traditional media and a news Website in your market. SMBs also indicate on page 4 of the Profiler that improving their marketing performance is a major business goal for 2018. As a Media Group Online member, you have a clear advantage over all other local media reps to become your clients’ trusted media consultant.

New Media Strategies To generate maximum interest from early-holiday shoppers, recommend your retail clients initiate an “The Early Elf Catches the Best Deals” promotion, proactively asking every customer for his or her email address to receive exclusive, early-holiday discounts. Customers appreciate businesses that share information on social media other than ad messages/discount offers. Create a series of short posts with tips for customers to prepare their homes for winter with the help/input of a local HVAC contractor. Since SMBs indicate in the ShopKeep report that they rely on other business owners as the #1 resource to improve their business performance, be the catalyst to help complementary retail clients create joint holiday promotions with heavy use of social media.