Friday, July 30, 2021

    Retail sales growth fell to new depths in April as the pandemic continues

    Retail sales growth fell to new depths in April as the pandemic continues

    US retail and food services sales fell 21.6% year-over-year (YoY) in April, a steep deceleration from the -5.7% YoY growth the industry posted in March, per estimates from the US Census Bureau. And retail’s performance is rapidly deteriorating during the pandemic, with retail and food services sales dropping 16.4% in April compared to March, nearly doubling March’s -8.3% month-to-month decrease. This nosedive in sales is surely due to the coronavirus pandemic forcing stores to close and limiting consumer spending, and these factors could hurt retail’s performance well beyond April.

    estimated month to month US retail sales growth



    Business Insider Intelligence


    As the pandemic goes on, it’s ravaging sales in all categories except for e-commerce.

    • Every retail segment that’s not related to e-commerce saw its sales decrease from March to April, suggesting that retail hasn’t reached the end of its plunge yet. Clothing and accessories was the hardest-hit category, with sales plunging 78.8% in April compared to March, which is a much bigger drop than the already-massive 49.4% drop in sales it posted in March when compared to its February performance. Grocery stores even saw their sales fall 13.2% in April compared to March despite their importance to consumers, possibly because the initial panic of the pandemic has subsided, causing consumers to spend less on food products, too.
    • But e-commerce’s performance actually picked up in April, likely pushing all merchants to focus on the channel during the pandemic. Nonstore retailers, which include e-tailers, saw their sales grow 8.4% in April relative to March after their sales grew 4.9% in March compared to the prior month. This is likely because buying products online limits consumers’ exposure to other people and shared surfaces, making online shopping particularly attractive as people try to avoid contracting the virus. In response, many merchants that have seen their sales evaporate may put more effort into their e-commerce capabilities, whether that’s joining marketplaces like Amazon, bolstering omnichannel fulfillment capabilities, or other tactics.

    It’s possible that the drop in spending in the US may be approaching its lowest point in May, which would be welcome news for merchants that want to turn their performances around. In the four weeks leading up to May 7, Mastercard’s annual US switched volume growth decreased less and less, shrinking from -26% YoY in the week ending April 14 to -7% in the week ending May 7.

    Mastercard processes a huge number of transactions — it handled 22.1 billion switched transactions in Q1 2020 — which can make it a useful benchmark for broader industry trends. So, its recent results may mean that the drop in consumer spending, and through that retail sales, may reach its bottom in May or soon after, at which point retailers will be able to adjust to the new level of demand and focus on bringing in more sales rather than trying to avoid losing sales.

    Want to read more stories like this one? Here’s how to get access:

    1. Business Insider Intelligence analyzes the payments and commerce industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more.>> Check if your company has BII Enterprise membership access
    2. Sign up for the Payments & Commerce Pro, Business Insider Intelligence’s expert email newsletter keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week.>> Get Started
    3. Explore related topics in more depth.>> Visit Our Report Store
    4. Current subscribers can log in to read the briefing here.

    Signup Today: Payments and Commerce Briefing by Business Insider Intelligence

    LoadingSomething is loading.

    More:

    BI Intelligence
    BI Intelligence Content Marketing
    Insider Intelligence
    E-Commerce

    Read More