US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

July Retail Sales Report: Still Seeing Improvements, But at Slowing Rates

The July advance monthly retail sales report was released on August 14. One thing worth noting -- for the uninitiated -- is that this information is linked to sales by type of retail outlet, but that doesn’t fully align with sales of product categories in some cases. For instance, sales of sporting and recreation goods might be lower than one would expect because the data only count sales at stores that primarily sell these products and do not include items in this category that are sold at mass merchants like Walmart and Target, whose sales are classified elsewhere.

The July report shows decelerations in most categories, even those that saw rapid gains in June over May. The differentials between 2020 and 2019 retail sales levels on a comparable month basis are narrowing in many cases too. This month reflects the impact of the resurgence in infections, mask mandates, and re-closures of some businesses in several states and municipalities.

The big winners overall continue to be the same ones from last few months. However, even as they continue to show strength against same month 2019 sales, they are off May 2020 highs and continued to fall or were relatively flat from June 2020’s lower levels:

  • grocery/food retail stores -- July 2020 was +0.2% from June 2020, which was 1.5% below May 2020 levels; and July 2020 was still +11.1% from July 2019
  • building materials/garden equipment dealers -- July 2020 was -2.9% from June 2020, but still +14.8% from July 2019
  • retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores) -- July 2020 was +0.7% from June 2020, which was below May 2020 levels; and July 2020 was still +24.7% from July 2019

These are retailers that, for the most part, remained open during stay-at-home orders because they were considered “essential” businesses. Additionally, their product mix includes categories that continue to benefit from the shift toward staying home – e.g., home cooking over eating out and DIY home and garden improvements. Consumers are still largely limiting their shopping to these types of retail outlets.   

Sales at sporting goods, hobby, musical instruments & book stores, which saw rapid gains in June 2020, experienced sales decline from that spike in sales during July. This category is -5.0% from June 2020, even as revised June retail sales were +27.6% from May 2020. Still, sales at these retail outlets in July 2020 was +20.9% from July 2019.

Several other categories are also showing still big gains over very low previous month sales levels, even though they are still seriously lagging 2019 same-month sales. In July, the notable example was electronics and appliances stores, which were +22.9 from June 2020, but -2.8% from July 2019.

Other outlets have sales levels moderating after huge spikes in sales from May to June, lining up with such businesses reopening. For instance,

  • furniture stores – July 2020 was flat compared to June 2020, but June was +37.4% from May 2020; and July 2020 was still -0.7% from July 2019
  • gas stations – July 2020 was +6.2% from June 2020, but June was +14.8% from May 2020; and July 2020 was still -15.6% from July 2019
  • clothing stores – July 2020 was +5.7% from June 2020, but June was +98.8% from May 2020; and July 2020 was still -20.9% from July 2019. These troubling sales levels are reflected in a large number of big-name clothing retail bankruptcies.
  • foodservice – July 2020 was +5.0% from June 2020, but June was +26.7% from May 2020; and July 2020 was still -18.9% from July 2019. Bankruptcies are hitting this segment hard too, with a few lists here and here.

Economists and other interested parties – including Freedonia analysts – will be closely monitoring next month’s retail sales report to see the strength of sales growth for August, looking for the impact of the unusual back-to-school season in an era of mask mandates and remote schooling in many local districts.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the COVID-19 with a comparison to historical recessions. Food- and beverage-related reports are also available from our sister publisher, Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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