Every retailer is arguably part fortune teller, and every merchandising plan is a bet that future demand will justify a particular product mix or inventory level.

Indeed, major retailers often make bold predictions about the course of the US economy: “It’s going to be a big holiday season,” Walmart US president and CEO John Furner told investors during an earnings call in August.

But where does such a prediction come from? Does Walmart have a crystal ball hidden somewhere in its Bentonville, Arkansas, HQ or is this just a best guess?

The answer is obviously the latter, but the company’s economic predictions aren’t coming out of nowhere. Walmart uses an AI-powered inventory management system to predict demand, and this year it’s testing out a new and improved version designed to help meet demand without building up excess inventory like it did in 2021.

Keep reading here.—AV

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The holiday shopping season is fast approaching, and new data signals that the American consumer still has momentum going into the fourth quarter.

US retail sales increased a better-than-forecast 0.7% in September, according to the latest Census Bureau numbers, which is the sixth straight month of gains. While the inflation-adjusted increase was just 0.3%, some economists are still optimistic.

“The stronger-than-forecast rise in retail sales in September and upward revisions to the prior two months indicate that consumers maintain a buoyant pace of spending as employment and income growth remain sturdy,” Nationwide Chief Economist Kathy Bostjancic wrote in a research brief emailed to Retail Brew.

Several major retail categories, however, had lower sales or stayed flat in September:

• Electronics and appliance store sales dropped 0.8%.
• Clothing sales fell 0.8%.
• Building materials and gardening supplies fell 0.2%.
• And sales at sporting goods, furniture, and department stores saw zero gains.

Bolstering the headline number was a 1.1% bump in nonstore sales (i.e., online sales) and increases in the sale of essential items such as groceries and gasoline.

If this dynamic continues into the holidays, it could spell trouble for retailers peddling big-ticket discretionary items, but a new forecast from Deloitte predicted that shoppers won’t hold back this year despite expectations of higher prices.

Keep reading here.—AV

It’s a spooky time for retailers—the earnings season right before holiday shopping kicks into full gear. As the Commerce Department reported last week, retail spending was up in September, but these next several weeks might be a whole different animal.

Let’s dive into what’s going on this week in retail.

In hirings: Today marks the beginning of Tim Wentworth’s tenure as CEO of Walgreens; the company appointed him to the role earlier this month.

• Wentworth is a healthcare industry vet who was the founder and CEO of Cigna’s health services arm, Evernorth. Before that, he was CEO of pharmacy benefit company Express Scripts.
• Wentworth takes the helm at a time when Walgreens wants to bulk up its healthcare services business and restore a falling stock price and profits.

The company has faced headwinds from slower sales of Covid tests and vaccines, and shoppers who have felt the pinch of inflation.

Keep reading here.—KM

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