PORT WASHINGTON, N.Y. — The current inflationary economy has created a bifurcation of the consumer base, so it is important that tire dealers market to both high- and low-income groups, NPD Group L.P.'s Nathan Shipley said.
While retail dollar sales increased this year, tire unit sales edged up only slightly, buoyed by households with $100,000-plus income, according to Shipley, an automotive industry analyst with NPD.
NPD's point-of-sale retail tracking of tires recently expanded, now measuring over 50 retail banners, comprised of both brick-and-mortar and e-commerce retailers and tire dealerships. NPD has been tracking tires since 2018, and the automotive aftermarket for more than 20 years, and has the ability to analyze the retail sales results on a weekly basis.
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During the 52 weeks ending July 2, unit sales of tires in the U.S. increased less than 1%, yet dollar sales jumped double digits as a result of the average unit price increasing over 15% during the period, according to NPD.
However retail tire unit volume this year is below what was happening in 2019 before the pandemic.
Shipley said the research firm compares current retail sales data with pre-pandemic data, ignoring "a lot of the noise" and anomalies, such as temporary business shutdowns, federal stimulus and other pandemic-related economic assistance programs during 2020 and 2021.
"In spite of all of that, dollar volume is trending in line with 2021 levels, which sounds at the height, that sounds somewhat positive, I suppose. 2021 being such a good year for retail because of vaccine rollouts and then consumers are getting out of the home again, and they were traveling again and they're spending their stimulus (distributions). …
"But when you look at the other side of the story, which is the unit volume story. Unit volume is trending generally below the last two years and, depending on which week you look at in 2019, levels are slightly under," he said.
"When dollar sales are trending at last year's level, but unit sales are way below it, that means the price that consumers are paying for general goods has shot up dramatically. ... There's no doubt inflation is very much part of this story."
This also means the higher-income consumers are the ones generally willing, and able, to pay the higher prices.
"Growth at retail was driven by higher-income households. That's the takeaway," Shipley said, referring to the retail market in general over the past 2 1/2 years.