by  | Jun 21, 2021 | Retail News

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The industry took a beating last year. Challenges remain, but here are a few indications of retailers’ strength.

Last year was a challenge like no other for the retail industry. COVID-19 upended people’s existence worldwide, threatening human life and undermining the global economy. Job and wage losses took a toll. Even those able to stay healthy and financially secure have faced disruptions to daily life, upsetting work, school and other routines.

All of this has had implications for retailers. Specialized retailers and department stores were forced to close for months while grocers and mass merchants were allowed to stay open as essential businesses. But for all of them, supply and demand were undependable last year. Meanwhile, nervous consumers have expected stores to be clean and safe or to offer e-commerce and pickup services even if they hadn’t before.
Thankfully, in the U.S., the federal government came through a number of times, pumping trillions of dollars into the economy, much of it directly into consumers’ pockets. Now, consumer confidence is on the rebound, well up in recent months, reaching a high in April not seen since February 2020, according to The Conference Board.

Several challenges remain, however, and they’re not minor.

That starts with the fact that, while there are signs it’s easing in the U.S. thanks mostly to the distribution of vaccines, the pandemic isn’t over. Further, the consumer remains under pressure. Despite improvement, the employment picture is cloudy, with millions of Americans still out of work, according to the ADP Research Institute, and hiring unexpectedly weak in April, according to the U.S. Labor Department. The pre-pandemic wealth gap and middle class fragility haven’t eased, while pandemic-era anxiety around health and money lingers. Finally, to the extent the pandemic does recede, there is fresh competition for shoppers’ dollars from services, with Morgan Stanley research finding that more than 30% of consumers have plans to spend more on travel and leisure.

Nevertheless, there are five strong indicators that retail will be okay.

1. Retail sales have risen through most of the pandemic

Except for March and April last year, when, for most of those weeks, retailers selling discretionary goods were shut in an effort to stem the spread of the coronavirus, retail sales in 2020, as tracked by Retail Dive, rose each month compared to 2019. In 2021, they have fairly soared year over year (as tracked by Retail Dive), even in the early months that are mostly unaffected by pandemic-related comparisons — 13% in January, 7.8% in February and 28.5% in March. That blockbuster result last month reflects the bounce from the lows a year ago when stores were closed, and what many economists are daring to call an emerging recovery for retail.

“Consumer spending in March 2021 has recovered to or exceeded spending in February 2020 — prior to the onset of the pandemic and related containment measures — in all categories except food and drink establishments,” Cailin Birch, global economist at The Economist Intelligence Unit, said in a statement. “We continue to expect restaurants and bars, and other entertainment and hospitality venues, to be the slowest retail businesses to recover from the crisis. Overall, however, the March data highlighted the strength of the consumer recovery in the U.S.”

RetailDive.com, Daphne Howland

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Rob Samtmann is the VP of Operations on the RBN Executive Committee and a RBN Member from Equity Retail Brokers  in PA.