Retail Resilience: Consumer Durables and Retail Industry 2024

The consumer durables and retail sector remain evolving as 2024 concludes, reflecting shifts in spending habits, economic pressures, and industry trends.

While overall retail sales show resilience, challenges like inflation, rising tariffs, and operational inefficiencies highlight a complex landscape for businesses and consumers. Our last blog post on the retail industry covered trends this time last year. Senior Underwriter, Marjorie Weinberg provided insight into the industry in this last month of 2024.

Retail Sales Rebound Amid Economic Stability

Retail sales surged in October, growing 4.13% year over year, driven by job gains, higher wages, and reduced inflation for goods. Core retail sales (excluding restaurants, auto dealers, and gas stations) rose 4.59% year over year, with online sales, clothing and accessories, and health and personal care leading the way.

Holiday shopping is expected to maintain momentum, with Black Friday and Cyber Monday sales projected to grow by 5%, hitting $75 billion for the first time. The National Retail Federation anticipates November-December sales to increase by 2.5%-3.5%, reaching up to $989 billion, with online sales accounting for 30.1% of the total. Younger consumers (18-24) are also fueling growth in thrift and resale shops, adding diversity to shopping channels.

Industry Challenges: Closures, Bankruptcies, and Rising Costs

Despite strong consumer demand, the retail sector faces headwinds. Store closures outpaced openings this year, reversing trends seen in 2022 and 2023. Financial distress has hit discretionary goods retailers, with more than 80 companies filing for bankruptcy, a 27% increase from last year.

Proposed tariffs from President-elect Donald Trump could compound these issues in 2025. Tariffs of 10% on all imports and 60% on Chinese goods threaten to raise consumer prices dramatically, increasing spending on apparel by up to $24 billion and driving inflation higher. Dollar stores, furniture retailers, and home goods sellers are particularly vulnerable. If enacted, these tariffs could reduce Americans’ spending power by $46-78 billion annually, straining low-income households the most.

Operational Hurdles: Balancing In-Store and Online Shopping

Retailers are faced with navigating consumer expectations across online and in-store channels. Locking up products in physical stores and relying heavily on self-checkouts deter customers seeking convenience or human interaction. Poor staffing levels exacerbate the issue, pushing frustrated shoppers online out of convenience.

Good customer service remains a critical differentiator for brick-and-mortar retailers. Engaging in-store experiences encourage repeat visits, offering a competitive edge over e-commerce platforms.

Looking Ahead

The retail landscape reflects a blend of resilience and challenges as the year ends. Sustained economic momentum, strong holiday sales, and evolving consumer preferences offer opportunities, but businesses must address financial pressures, operational inefficiencies, and potential tariff impacts to stay competitive.

With 2025 looming, the industry must remain adaptable, balancing near-term pressures with long-term strategies for growth and innovation.