The coronavirus pandemic initiated another economic milestone in April, one that is having a devastating effect on the retail industry.
The Commerce Department reported that U.S. retail sales — a measure of purchases at stores and online as well as automobiles, gas and dining sales — totaled $403.9 billion in the month of April, a whopping 16.4% drop from the previous month and 21.6% below April 2019 sales.
The decline is roughly double the drop-off recorded in March, which was the worst monthly decline since the Census Bureau began collecting data in 1992.
Almost every segment of the retail industry felt the impact of the coronavirus shutdown, with the exception of food and beverage stores, which saw a 12% year-over-year increase as Americans continued to stock up on essentials. And nonstore retailers, a sector that includes e-commerce companies like Amazon, posted a 21.6% jump in sales year over year.
Clothing and accessories retailers saw the most dramatic decline, with sales plummeting 89.3%.
The impact of the COVID-19 shutdowns is already manifesting across the retail industry. In recent weeks, a number of major retailers have filed for bankruptcy protection, including Neiman Marcus, Aldo, J.Crew, John Varvatos Enterprises and others.
Matthew Shay, president and CEO of the National Retail Federation said in a statement that the dramatic sales declines were to be expected, given the unprecedented economic closures during the month of April, as well as the country’s staggering number of job losses, which haven’t been seen since the Great Depression. “We are in the midst of historic unemployment and when it comes to personal finances, discretionary spending takes a back seat to essentials,” he said.
Shay did try to offer some encouragement: “Prior to this pandemic, retail was setting records in year-over-year growth, employment and investment. It is a resilient industry serving a smart consumer, and despite today’s report, we know it will be leading our nation’s economic recovery as this crisis recedes.”
This month, many states across the U.S. began the process of reopening businesses, which has prompted some experts to declare that the worst of the economic fall-off is over.
However, Patrick Gourley, assistant professor in the Department of Economics & Business Analytics at the University of New Haven suggested that retail sales and employment could continue to decline. “We may have seen the worst as far as the speed of the declines, but I think retailers are going to wait for customers to return after the lockdowns end to start rehiring workers,” he told FN, adding, “It’s risky to predict the future — only time will tell.”