The October advance monthly retail sales report was released on November 17. 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 October report shows some growth over September sales, but declines in the same period in more categories. The growth that happened was muted and generally below expectations. Sales were hampered by rising COVID-19 cases in much of the country as well as economic uncertainty as hoped-for government stimulus and financial support programs did not come to fruition.
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 – October 2020 dipped 0.2% from September 2020, but October 2020 was still up 10.3% from October 2019. This is 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 – October 2020 was only up 0.9% from September 2020 but still up 19.5% from October 2019. Although experts expect the DIY trend to hold, these elevated sales may falter as the seasons change and weather cools in much of the country; still, October sales were supported by things such as seasonal décor and outdoor heaters, something expected to continue through the rest of 2020.
- retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores) – October 2020 was up 3.1% from September 2020, but October 2020 was still up 29.1% from September 2019. The convenience of e-commerce will make this trend sticky beyond the pandemic.
For the most part, the retailers mentioned above 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. Many 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 before improving in September and falling again in October. While back-to-school shopping and fall sports spending supported sales in September, October sales were more likely to be early holiday shopping. October 2020 sales were up 12.4% from October 2019.
A few other highlights:
- furniture stores – October 2020 saw small dips, falling 0.4% compared to September 2020. This category is still in positive territory year-over-year as October 2020 sales were 5.2% greater than in October 2019. Creature comforts and furniture to support at-home work and learning continues to drive sales.
- gas stations – October 2020 was up 0.4% from September 2020 but still down 14% from October 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 – October 2020 was down 4.2% from September 2020, which had been an improved month in an overall bad year for clothing sales. October is typically a month that signals fresh buying of cool weather clothes as the seasons change, but sales in 2020 were down 12.6% from October 2019. Bankruptcies are continuing in this market, although some are making it through and reopening after restructuring. Online sales and curbside pickups help sales at these stores.
- Food services with drinking places dipped again in October, falling 0.9% from September 2020. Cooler weather is moving diners away from outdoor dining options that supported such sales in warmer weather. October 2020 sales are still seriously lagging 2019 same-month sales (-14.2%).
Economists and other interested parties – including Freedonia analysts – will be closely monitoring next month’s retail sales report to see how the holiday shopping season kicks off with Black Friday specials starting early and running through much of the month. There remains some hope on the horizon for the retail sector as sharply curtailed sales on services (limited travel, dining out, away from home entertainment, personal care services) leave most households with more money to spend on goods at retail, particularly as the holiday season approaches. Still, spikes in COVID-19 cases will hurt any retail that is not done via e-commerce as consumers again stay away from public places and as some areas limit or close dine-in options again.
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.