While the back half of the year remains a wild card viewed with optimism by most of the toy industry, overall retail spending points to a slowdown at the cash register amid modest growth.
New data from the U.S. Census Bureau reveals that overall U.S. retail sales grew by 1.5% year-over-year in June. The National Retail Federation (NRF), which uses a different methodology in its tracking, says that unadjusted June sales spiked 3.3% over June 2022. For the first half of the year, NRF says that sales were up 4% versus last year. The momentum bodes well for the upcoming back-to-school season.
June retail sales confirm that while the economy may be cooling, consumers remain on solid footing and are spending on household priorities. Back-to-class spending is one of the most important shopping occasions of the year, and NRF’s consumer research shows that back-to-school and college spending is expected to set new records. Consumers are looking for the best value and deals, and retailers are well stocked with essential items for families and students.”
The NRF and Census do not specifically track toys, but with second quarter earnings season coming up soon, the industry and its analysts are expected to receive a better look at the health of the business in the weeks ahead.
“The pace of spending is slower, but consumers are still in control of the direction of the economy thanks to the still-growing labor market and a comfortable cushion of savings,” says NRF Chief Economist Jack Kleinhenz. “Jobs aren’t growing as fast as they were, but employment is by no means in a slump, and if consumers have jobs, they have the willingness to spend. On average, consumer balance sheets remain sturdy and they have the wherewithal to support spending for most of the rest of the year. That’s thanks, in part, to excess savings built up during the pandemic along with easing inflation.”
For June, six of the nine categories tracked by the NRF showed gains.
Traditionally, back-to-school shopping can include toys, games, and other toy-adjacent categories. A recent study by the NRF and Prosper Insights & Analytics revealed that back-to-school spending in the U.S. is expected to reach a record $41.5 billion, up from $36.9 billion last year and topping the record $37.1 billion spent in 2021.
Additionally, the NRF says that back-to-college spending should hit $94 billion, topping last year’s record by nearly $20 billion.
