In the midst of a sluggish economy and challenging sales, retailers remain optimistic that there are brighter times on the horizon. According to the latest NRF-BTM Executive Opinion Survey, a monthly index by the National Retail Federation (NRF) and the Bank of Tokyo Mitsubishi Ltd. (BTM), the Retail Sector Performance Index (RSPI) for May stood at 47.6 percent-almost identical to April’s 47.7 percent. (The RSPI measures retail executives’ evaluations of monthly sales, customer traffic, the average transaction per customer, employment, inventories and a six-month-ahead sales outlook expectation. The RSPI is based on a scale of 0%-100% with 50% equaling normal.)


According to the survey, retailers remained optimistic about the industry’s short-term future. The May Demand Outlook Index (a six-month outlook for sales) stood at 46.9 percent compared to 50.0 percent in April. This was the second highest reading of this index since the survey’s inception.



“As expected, there has been some weakness in the industry as a result of economic and geopolitical events,” said NRF President Tracy Mullin. “Industry executives seem optimistic that sales will improve during the second half, just in time for the fourth quarter and the crucial holiday season.”


For May, the Current Demand Index (average of sales and traffic) stood at 47.4 percent compared to 50.0 percent in the prior month. Although sales improved (50.0% in May vs. 46.4% in April), traffic numbers were down (46.9 % in May vs. 51.8% in April).


The Operations Index (average of employment and inventories) in May rose to 48.4 percent versus 43.1 percent in April. The May reading was the highest since the survey began, as retailers appear to be seeing a buildup of inventories. As a result, the Pricing Index (industry discounting power) decreased to 20.3 percent in May from 25.0 percent in the previous month.


“It appears that retailers have stepped up discounting in the face of the inventory buildup,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd. “Retailers trying to sell spring and summer merchandise have been hoping the weather will cooperate.”


In a special question, retail executives were asked to assess whether they perceived a general sharp sales falloff in big-ticket items. A majority (83%) said that big-ticket spending weakness occurred and was persistent through mid-May.


The NRF-BTM Executive Opinion Survey is a valuable new strategic tool to track essential metrics that gauge the state of the U.S. retail industry. The survey is used to gather the opinions of the industry’s top executives on trends in merchandising, hiring, sales expectations, customer traffic and special seasonal-related developments. The survey is conducted on a monthly basis, and as results accumulate, will be used to develop an aggregated index of these industry trends.