June Monthly retail sales from US Department of Commerce
Every month, the U.S. Department of Commerce, Census Bureau, releases its first calculation of the previous month’s retail sales. At Retail Dive, we report these figures by grouping the key segments that define “retail” in a way that we hope is most meaningful to the industry.
We use unadjusted, advance numbers and year-over-year comparisons, with the government’s most recent revisions to its year-ago estimates. And although we of course include e-commerce, captured in the federal report as “nonstore retailers,” readers will note that the government includes sales from businesses not generally thought of as “e-commerce.”
YoY sales performance by sector
YTD retail sales
How key retail sales fared year over year
Retail Dive calculates “total retail sales” of core segments, as well as what the Commerce Department calls “Nonstore retailers.” That includes e-commerce, mail order and infomercials, but also revenue from subsectors not generally considered traditional retail, including vending machines, home delivery (including newspapers and home heating oil), door-to-door solicitation, in-home demonstrations and portable stalls like non-food street vendors. Year-over-year comparisons use the most recent revisions to estimates; year-to-date numbers use only advance numbers.
Data from U.S. Census Bureau, Advanced Monthly Retail Trade Survey
June 2020 Total monthly sales: $179.22B
Overall June retail sales among the sectors covered by Retail Dive, using U.S. Commerce Department numbers, rose 11% year over year. The bounce reflects some pent-up demand, with consumer sentiment and spending power propped up by the government’s pandemic-related support checks and unemployment payments. E-commerce soared 36% to $80 billion, as shoppers’ interest in returning to stores remains muted.
But the gains did little to mend the frayed nerves of many analysts, who note that, with the COVID-19 outbreak gaining strength in many areas of the U.S., retail’s near-term prospects, less than six months from the holiday season, remain cloudy.
"Retail sales may have had a strong showing for June, but that's old news given how quickly the coronavirus resurgence is beating up the economy,” Robert Frick, corporate economist at Navy Federal Credit Union, said in emailed comments. “Layoffs from the resurgence, bankruptcies, and support industries to those mainly affected by the coronavirus point to a slowing recovery, and a poor showing for retail sales this month. This will put more pressure on Congress to continue some level of support to the millions of Americans without jobs due to the coronavirus — support that ends this month."
Wells Fargo Chief Economist Jay Bryson sounded an alarm over the Labor Department’s weekly jobless claims report, also released Thursday, marking 1.3 million unemployment claims during the previous week. In emailed comments, Bryson called that “frustratingly elevated,” adding that the resulting 11.9% unemployment rate “is another illustration of just how weak the labor market remains at present.”
If the pandemic-specific unemployment aid isn’t renewed, “many of those now opening their wallets will find they quickly empty and will shut them for a considerable time,” GlobalData Retail Managing Director Neil Saunders said in emailed comments. “That will stop and reverse retail growth.”
Some retail sectors have plenty to worry about even now. While the closure of gyms helped push up the month’s sporting goods sales 26% from June last year to $8 billion, apparel sales plummeted another 25%. Segments that previously seemed to benefit from the pandemic’s stay-at-home orders took a hit in June, with electronics sales falling 12% and furniture sales ticking down 1%.
While e-commerce enjoyed another lift, its share of overall spending “has declined since the peak of the lockdown in April,” Saunders said. Plus, there’s a downside, as retailers lose on the bottom line due to the channel’s margin squeeze, he noted.
May 2020 Total monthly sales: $172.78B
Retail sales in May, as tracked by Retail Dive using the U.S. Commerce Department’s numbers, ticked up 1.1% year over year. But they soared 28.2% from April as many nonessential stores reopened after being shut due to the pandemic.
The government found a 1.4% year-over-year sales decline, and a month-over-month surge of 16.8%, but those numbers include auto and gasoline sales, and spending at bars and restaurants, which Retail Dive does not include.
The variations among sectors have been especially stark in the pandemic months, and May was no exception. Apparel sales, which have plummeted the last two months, bounced back 266% from April, but the segment’s year-over-year decline of 63.7% was still devastating. Department store sales fell 26.4% year over year, making their 46.9% recovery from April small consolation.
Non-store sales (mostly e-commerce) continued their meteoric rise, increasing 32% from last year and 10.9% from April. But GlobalData Retail researchers found that non-store’s proportion of sales fell from April’s 18.4% to 16.4% in May.
“This underlines our view that while digital sales have been elevated by this crisis, the proportion of trade taken by online during the period when most non-essential shops were shut will not be sustained as the retail economy starts to reopen,” GlobalData Retail Managing Director Neil Saunders said in emailed comments.
While May’s performance suggests a decent recovery, there are several dispiriting caveats, including whether the bounce could peter out as demand falls off again.
“How much of the spending was from pent-up demand and how much was fueled by government checks is what’s now up for debate,” Robert Frick, corporate economist at Navy Federal Credit Union, said in emailed comments. “To continue this strong spending, we’ll need more strong job growth, and, for the time being, continued government help. But it adds weight to the third quarter’s rebound being better than expected."
Moreover, these sales lifts will do little to ease the financial destruction at several retailers. “[W]hile sales numbers are improving, there continues to be immense damage to the bottom line,” Saunders said. “Much of retail is a volume business and even gentle declines in sales can cause severe erosion to profits.”
April 2020 Total monthly sales: $134.76B
Nearly all nonessential stores across the country were closed the whole month in hopes of slowing the COVID-19 pandemic and now several are reopening, so April’s record-setting results may be the worst of the year. But that’s little consolation for retailers.
Including segments like food and auto that fall outside Retail Dive’s tracking universe, the 21.6% sales decline in April from the year-ago period was even less desirable than in previous bleak periods — worse than the 18.5% drop of May 1938 or the 15.3% drop of February 1981, according to GlobalData Retail Managing Director Neil Saunders. And they fell more than most analysts expected, suggesting the consumer is in trouble. Wells Fargo researchers in May found that, while survey respondents said they do plan to resume discretionary shopping, nearly half said they’ll spend less than they did before the COVID-19 outbreak, compared to the mere 8% who plan to spend more.
"Maybe the most important aspect of the retail sales drop isn’t how far they fell, which set more records, but that forecasters so badly underestimated the numbers," Robert Frick, corporate economist with Navy Federal Credit Union, said in emailed comments. "It shows we still don’t have a handle on the depth of the recession and how Americans are reacting to the pandemic and lockdowns."
While stores are coming back, most with reduced hours and other limitations meant to ensure safe shopping, there won’t be much of a rebound in any month this year, according to Saunders. "[T]he pace of opening is slow, and many shoppers remain in financial distress," he said in emailed comments. "As such, May will not be a month of celebration. Nor will June. Nor July. Nor probably the rest of this year."
March 2020 Total monthly sales: $158.36B
The COVID-19 pandemic was already making its mark in February, as Wells Fargo economists noted last month, but its devastating impact on retail hit hard in March. Most headlines Wednesday morning noted the worst sales decline in decades, if not ever, as the U.S. Department of Commerce’s preliminary results for the month show an 8.7% decline from February, translating to a 6.2% year over year decline, to $483.1 billion.
Those numbers, which are “adjusted for seasonal variation and holiday and trading-day differences, but not for price changes,” include auto and gasoline sales, and spending at bars and restaurants. Retail Dive chooses different numbers from the Commerce Department’s monthly reports in order to present a clearer picture of retail as understood by our readers. We use unadjusted numbers, for example, in order to best align with what’s happening on the ground, and have chosen a key set of segments that doesn’t include food and beverage businesses or autos. Our numbers show a 3.8% increase year over year for general retailers (which includes mass merchants, warehouse clubs and supercenters, but also department stores) and a 14% year-over-year increase in digital sales. Strength in those categories helped actually boost retail sales from February by 2.9%, though there still was a 1.1% decline year over year.
The picture from March, a month when most stores were still open, is harrowing, especially in key categories. Year over year, apparel sales fell a whopping 52.5%, furniture sales fell 28%, sporting goods fell 23.7% and electronics fell 15.2%. And, while some sales moved online, that’s been “nowhere near enough to offset the declines in stores,” according to Neil Saunders, managing director of GlobalData Retail.
“The first state stay at home order only came into place on March 19th and for the early part of the month most consumers were behaving normally,” he said in emailed comments. “On top of that, the latter part of March saw a boost in spending on groceries, health products and home improvement – all things that helped support retail sales. April will have no such benefits.”
Indeed, nonessential retailers have been temporarily shut down, with no reopening in sight for weeks, imperiling not just their finances but also the livelihoods of so many of their workers. Furthermore, consumers, jittery about the economy, have not only reined in their nondiscretionary spending all the more, but many have also stopped the panic-buying that supported some retailers at least to some extent last month.
“As ugly as March was, it appears to be a prelude to a hideous April,” Saunders warned.
February 2020 Total monthly sales: $153.94B
Overall, February retail sales missed expectations — well before the effects of the outbreak of the coronavirus began to take its toll on U.S. retail. That doesn’t bode well for the rest of the year, although e-commerce and stores selling essentials will likely be spared to a great extent, according to Tim Quinlan, senior economist at Wells Fargo’s Economics Group. In January, consumer spending held up better, and that will help salvage retail’s first quarter, at least in the aggregate, according to a note from the group emailed to Retail Dive.
“The world has changed entirely since February, but heading into the crisis consumer confidence was holding up and spending was, if not robust, at least on track for modest growth in the first quarter,” he wrote, adding, “Note that online retailers saw another robust gain in February amid news that warehouse hiring is picking up even amidst the crisis. After that, we expect spending to fall. Panic buying of food and personal items for the home in March means a coming surge for these categories, if only temporarily.”
January 2020 Total monthly sales: $153.88B
Not a lot of surprises in January, and Moody's Vice President Mickey Chadha attributed the strength in sales to low unemployment numbers, economic growth and the "resiliency" of consumers. Plus, sales figures for the holidays, a time when many retailers gain a major proportion of their revenue, were still trickling in. For department stores, those reports ranged from middling to bleak, with declines continuing into the new year.
Meanwhile, Amazon once again posted strong growth — fueled by its move toward one-day Prime shipping — as the e-commerce giant and the whole online sector continue to grow and gain market share. But, as Retail Metrics mentioned in an emailed note, e-commerce growth (nonstore retail, as the Commerce Department calls it) was down considerably from a year ago, and January marked the first time since December 2018 that e-commerce didn't lead other retail sectors in growth.
Methodology
The federal government’s retail sales reports are highly anticipated each month. This tracker is based on the government’s “unadjusted” numbers, which track with how retailers themselves report sales.
The Commerce Department revises its numbers a couple of times after they are first published. To accommodate that, and to make the data more meaningful, Retail Dive has adjusted the year-over-year comparisons in each segment to use the government’s most recently revised year-ago number.
For the 2020 graph, that means that a decline or rise each month reflects the change from the most updated figure in 2019 to the latest (or advance) number in 2020. Past data points are revised to reflect this, and moving forward this is how the data will be calculated. In most cases, the numbers change only slightly if at all, but when the government’s revisions are major, it can make a difference. The year-to-date chart is based on “advance” numbers.
Read the original article from Retail Dive here.