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
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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