Malls make comeback and wholesale boosts DTC brand

The Retail Monitor, a monthly survey from CNBC and the National Retail Federation (NRF), found that sales ticked up 0.26% from March to April. NRF CEO Matthew Shay attributed the modest increase to “a growing job market and real gains in wages,” but qualified that “consumers remain focused on value and price and are shifting their spending patterns where needed to make ends meet.”

This trend is playing out online as well: The latest data from Adobe Analytics found that online spending remained resilient between January and April, rising 7% year over year on the back of “stable spend in discretionary categories,” the research firm said in a press release last week, while also noting that consumers are trading down to the cheapest goods across several categories.

In a Q1 earnings call released May 11, Shopify CFO Jeff Hoffmeister echoed that the company sees “consumer spend in North America remaining resilient, but we have factored in headwinds related to FX from the strong US dollar and some softness in European consumer spending in our Q2 outlook.”

Wholesale comes through: In summary, consumers are changing up their spending patterns, but how they’re doing so is arguably the more relevant question for retailers. As Solo Brands highlighted in its Q1 earnings call, direct-to-consumer sales continued their decline, though at a slower pace, while its lower-margin wholesale business grew.

Last quarter, Solo CEO Chris Metz told shareholders that its DTC business “can be fixed,” and emphasized that the brand would continue to generate the majority of its sales online. Its latest earnings, released last week, make it clear this process is still ongoing; direct sales declined 6.8%, although that was an improvement from the 21% drop in Q4. Metz said that though it was “still way too early, I very much like the progress we saw in Q1.”

Revenge of the mall: Meanwhile, the question of where consumers are shopping predictably came up during Simon Property Group’s Q1 earnings call on Monday. David Simon, CEO of the commercial real estate giant, said “malls made a big comeback,” and apparently the benefits were felt across categories.

“Honestly, it’s across the board: restaurants, entertainment, athleisure, sports-related,” he said. “It’s the bigger boxes, the Uniqlos, Primarks of the world, Zara.”

The cost of engagement: In the highly competitive world of online apparel retailers, Chinese upstarts Temu and Shein’s ongoing push into US markets could be losing steam, according to new data from Sensor Tower.

During a Placer.ai and Sensor Tower panel reviewing Q1 trends, Seema Shah, VP of research and insights for Sensor Tower, said Temu and Shein had the lowest percentage of organic mobile app downloads.

“In other words, most of their users are paid,” she said. “So they’re buying brand and mindshare through advertising, but that makes their customer acquisition cost perpetually higher than maybe some of their rivals like Amazon.”