Retail and food services saw their biggest monthly drop on record
Retail and food services sales in April plummeted 16.4%, their largest decline since the government began tracking data. Monthly sales in March were $483.5 billion compared to $403.9 billion in April, according to the Commerce Department.
The dismal figures almost doubled March’s massive drop of 8.3% as stay-at-home orders began to take effect, businesses across the country shut down, and millions were laid off from their jobs and lost income.
“I think obviously [the report] is a little bit discouraging but I also think it’s not that surprising to see how much retail — apparel specifically — suffered,” said Alexis DeSalva, a senior research analyst with Mintel.
The clothing and clothing accessories category experienced the biggest drop at almost 79%. Nearly every type of retail operation declined, even grocery stores, which decreased 13.2% last month.
Camilla Yanushevsky, an equity research analyst at CFRA Research, thinks this figure reflects how people had initially panicked about the coronavirus and began stockpiling food and household items in March, but now don’t have as much to buy. “They already overbought everything in March, and the psychology of the consumer switches from stockpiling to penny pinching,” she said.
Alexis DeSalva said the decline may also reflect more grocery purchases at places such as Amazon, Target and Walmart instead. People may be buying all their necessities at a store like Walmart so they can avoid making multiple trips.
The only category to see gains was “nonstore retailers,” like online businesses, which jumped 8.4%.
While the clothing stores category had the biggest decline, the category could get a boost as companies advertise sales and consumers shift into a “treat yourself” mentality.
“I think some of these promos that rival Black Friday or Cyber Monday are going to cause a spur of demand for apparel,” Yanushevsky said.
Yanushevsky added that sporting goods equipment and apparel may also see a boost as the summer season begins and more people want to get out of the house. But businesses that sell bigger ticket items, like cars, will probably take longer to recover.
COVID-19 Economy FAQs
Will the federal government extend the extra COVID-19 unemployment benefits?
It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow said the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.
As states lift restrictions, are people going back to stores and restaurants?
States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.
Will surges in COVID-19 cases mean a return to lockdowns?
In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.
You can find answers to more questions here.
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