Analysis: Only bright spots in April were online, grocery
In April, total retail sales plummeted by 20.9% on a year-over-year basis. This is the worst performance on record, beating both May 1938 when sales declined by 18.5% and February 1981 when sales dropped by 15.3%. Essentially, April was the month when large parts of the retail economy simply ground to a halt.
Apparel was the worst affected sector, with sales at clothing stores falling by 89.3%. To put this in context, in April 2019 it took clothing retailers just 3 days to generate as much revenue as they did across the whole of April 2020.
The shutdown of most physical apparel stores, plus the sharp decline in outfits needed for work and leisure contributed to the precipitous drop. While there were a few bright spots, most notably from athleisure and comfort clothing, consumers simply turned their backs on fashion in April.
Furniture and furnishings did not fare much better, with total sales from specialist shops down 66.3%. Electronics stores witnessed a similar decline of 64.8%. The boost in electronic accessories to aid working from home was nowhere near enough to offset the shunning of other areas of the mix including phones, televisions and appliances.
The one bright spot came from grocery stores where sales increased by 13.3% over the prior year. In the early part of the month, consumers stocked up on essentials as the country went into lockdown. In the latter part of the month, stockpiling abated but demand remained elevated as consumers, deprived of the ability to dine out, made more meals at home.
There was a sharp rise in online sales as consumers transferred some of their trade to digital channels. However, this switch was only partial and was insufficient to make up for the closure of non-essential shops.
Overall this is a dire set of numbers. However, the good news is that April is likely the trough – the lowest point of decline. May is the month when retail has started to reopen, and consumers have come back out to shop. However, the pace of opening is slow, and many shoppers remain in financial distress. As such, May will not be a month of celebration. Nor will June. Nor July. Nor probably the rest of this year. Retail’s recovery will be slow and, in our view, it won’t be until 2021 before trade starts to return to more normal patterns.