Retailers had already been struggling, but the April Retail Sales show how dramatic the downturn is, and the extent to which retailers are suffering.

The Figures

Experts predicted that April would see a drop in retail sales of 12.3 percent, but the final number ended up at 16.4 percent. The prediction followed the March drop in sales of 8.3 percent, which was the record since 1992. However, those March figures were later revised to 8.7 percent.

The total spending in April was $403.9 billion. This translates into an overall drop of 15.1 percent in retail trade from March and a 17.8 percent drop from April of 2019.

Around 68 percent of the country’s economy, which is valued at $21.5 trillion, is from personal consumption expenditures. The first quarter of the year saw this category drop 7.6 percent, as that was when the first social distancing measures began to go into effect.

Even if the extent of the decline in retail sales was not expected, the fact that there is a decline does not surprise anyone. After all, 36.5 million Americans filed for unemployment in just the past eight weeks, the most significant number of job losses since WWII.

Affected Areas

Nearly every single sector of retail felt the effects of the decline in sales. Grocers were the only type of retailers to experience gains during April, and clothing stores saw the biggest losses. Service stations and restaurants also did very poorly.

Clothing stores dropped 78.8 percent, making them the unhappy segment that was the worst affected. Electronics and appliances followed with a 60.6 percent drop, with home furnishing and furniture right behind it at a decrease of 58.7 percent. Sporting goods sales dropped 38 percent, with bars and restaurants experiencing a decline of 29.5 percent.

Gas stations saw a decline of 28.8 percent, miscellaneous retailers dropping 24.7 percent, and general merchandise dropped 20.8 percent. Health and personal care posted a decrease of 15.2 percent, food and beverage 13.1 percent, motor vehicles and parts 12.4 percent, and building materials and garden equipment 3.5 percent.

By contrast, non-store retailers saw an increase of 8.4 percent in sales.

The Importance

This drop in sales is particularly damaging to retailers, given that brick and mortar stores had already been struggling. The coronavirus and required social distancing measures have seemed to only make this worse.

The Potential Turnaround

Now that parts of the country are loosening their restrictions and retailers are reopening, the retail sales figures should improve. Those in the retail industry are anxious to see what happens when they open, although this will be a gradual process.

Source:

https://www.cnbc.com/2020/05/15/us-retail-sales-april-2020.html

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