August Retail Sales Report: Still Seeing Improvements But at Slowing Rates

The August advance monthly retail sales report was released on September 16. 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 August report shows an evening out across most categories, as those that had seen rapid gains during the pandemic are slowing or even declining and those that have done poorly are seeing a bit of an uptick. As a result, differentials between 2020 and 2019 retail sales levels on a comparable-month basis are continuing to narrow in many cases. This month reflects the impact of back-to-school spending, even if school is online throughout much of the country.

The big winners overall for the year 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 increasingly off pandemic highs:

• grocery/food retail stores – August 2020 was down 1.2% from July 2020, but August 2020 was still up 10% from August 2019 (a trend grocers and other food experts expect to continue as consumers continue to eat and cook at home more than pre-pandemic)
• building materials/garden equipment dealers – August 2020 was only up 2.0% from July 2020 but still up 15.4% from August 2019 (this elevation may falter as the seasons change and weather cools in much of the country, but industry experts expect the DIY trend to hold)
• retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores) – August 2020 was flat from July 2020, but August 2020 was still up 22.4% from August 2019 (the convenience of e-commerce will make this trend sticky beyond the pandemic)

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 instrument, and book stores – which saw rapid gains in June 2020 – experienced declines from that spike during July and August. This category is down 10.8 % from June 2020, even as revised June retail sales were up 27.6% from May 2020. Still, sales at these retail outlets in August 2020 were up 11.1% from August 2019.

None of the categories saw particularly large gains over previous month sales levels. Food services with drinking places had the best month, with sales levels 4.7% higher than those of July 2020, even though they are still seriously lagging 2019 same-month sales (-15.4%).

A few other highlights:

• furniture stores – August 2020 was up 2.1% compared to July 2020. This category has moved into positive territory year-over-year as August 2020 sales were 3.8% greater than in August 2019. Setting up virtual classrooms likely contributed to gains here.
• gas stations – August 2020 was up 0.4% from July 2020 but still down 15% from August 2019. People continue to leave home less often, and a reduced level of commuting and road-tripping is keeping sales at gas stations low.
• clothing stores – August 2020 was up 2.9% from July 2020, but still down 20.4% from August 2019. The monthly boost was likely due to back-to-school shopping and the coming change of seasons. Still, bankruptcies are continuing in this market.

Economists and other interested parties – including Freedonia analysts – will be closely monitoring next month’s retail sales report to see the strength of sales in September, looking for the impact of the continued easing and the elevated infection levels in parts of the country that had been previously less affected.

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.