Analyst: The housing market tide may be turning. Retailers should be ready

After the better-than-expected July increase in retail sales, the US Census Department of Commerce reported continued momentum with a 0.1% month-over-month increase for August. This slight rise defies many projections of a decline. A year-over-year uptick of 2.1% also materialized in August as consumers seemed to embrace falling inflation.

August represented a late summer focus to seek out back-to-school savings and many consumers took advantage of the enticing offers and deals being promoted by retailers. The critical period heading into Labor Day weekend appeared to be a time consumers circled on their calendars. Smart, savvy shoppers have come to learn that retail promotions are plentiful then, and keeping a sharp lookout brings opportunities to stretch their dollars.

This latest retail sales report likely cements a long-awaited interest rate cut, with the potential for more on the horizon. When the anticipated rate reduction occurs, it will be a significant event that helps address the prolonged battle of inflation alongside the higher cost of living we have experienced for the past couple of years.

Lower interest rates should inject some life into the challenging housing market and allow more consumers an opportunity for homeownership.

Retailers, especially those representing discretionary spending in home improvement and home furnishings, have been negatively impacted by the housing market. Category retailers may sense a turning of the tides and should be planning their promotional strategies to capture a greater share of consumer spend.

Weakening inflation, falling interest rates, lower unemployment, combined with a 6-month high in consumer confidence, should lay the foundation for a positive holiday shopping season.

While it is currently unknown how political elections will ultimately impact consumers’ mindsets, it is predicted that a significant number of holiday shoppers will begin their journeys early, with many not holding loyalty to a specific brand or retailer.

Winning advertisers should look to motivate in-market shoppers often, leveraging the most influential media and establishing multiple touchpoints along their path-to-purchase.

Non-store retailers continue to see increased spending, particularly as back-to-school shopping takes hold and online shopping continues to surge – reinforcing the importance of retailers to meet consumers where they are and provide a seamless omnichannel experience.

Chip West of RRD Retail is a retail and consumer behavior expert.