Retail sales in the United States fell 16.4% from March to April, a record, as the closure of businesses caused by the coronavirus pandemic pushed buyers away, threatened stores across the country and hurt even more an economy already in decline. Read: Reviran: Mining and cars could open sooner
In a report released Friday, the Commerce Department reported that retail has plummeted so rapidly that sales in the past 12 months have dropped an impressive 21.6%.
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May 15, 2020
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The severity of the slump is unmatched in retail figures, which were recorded in 1992. The monthly decline in April nearly doubled the previous record drop of 8.3%, just a month earlier.
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“It is as if a hurricane has arrived and that it has devastated the entire economy, and now we are trying to make everything work again,” said Joshua Shapiro, chief economist at consultancy Maria Fiorini Ramírez.
Shapiro said he believes that retail sales should pick up a bit as states and municipalities reopen their economies, but said overall sales will remain depressed “because there will be a large portion of lost jobs that will not return.”
The strongest falls from March to April were in clothing, electronics, furniture and restaurant stores. The migration of consumers to online shopping was also accelerated, with the segment registering a monthly gain of 8.4%. Measured year-over-year, online sales increased 21.6%.
Aside from online trading, no category of retail trade was spared the hit in April. Car dealerships suffered a 13% monthly drop. Furniture stores absorbed a 59% drop. Electronics and appliance stores fell more than 60%.
Stores that sell construction materials at retail recorded a drop of approximately 3%. After panic buying in March, grocery sales fell 13%.
Clothing store sales fell 79% and department store sales 29%. Restaurants, some of which are already beginning to close permanently, suffered a decrease of nearly 30% despite aggressively shifting to take-out and home delivery orders.
For a retail sector already suffering from consumer migration to online shopping and app delivery services, a consecutive free fall in spending represents a serious risk. Department store chains like Neiman Marcus and J. Crew have filed for bankruptcy protection from the government. Hotels, restaurants, and car dealerships are also in danger.
The entire economic model is falling apart, ”said Neil Saunders, managing director of GlobalData Retail. “This is going to be very painful. For some, it will be fatal. “
Retailers are in jeopardy not only because of business closings by order of the authorities, but also for a record loss of 36 million jobs in the United States in the past two months. The unemployed tend to sharply reduce their purchases.
An analysis conducted in April by a group of academic economists found that a month-long shutdown could wipe out 31% of non-grocery retailers. A four-month shutdown could force 65% bankruptcy.
The drop in retail spending is a key reason why the US economy is contracting. Shopping at retailers is an important component of overall spending for American consumers, accounting for about 70% of economic growth.
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