Retail Gross sales Fell Extra Than Anticipated as Spending Slowed
Uncertainty over vacation spending has heightened as retailers moved annual sales events to October to speed up the season and prevent overcrowded stores and shipping delays in November. Many large chains reported sales increases in October but were unsure how this would affect spending in November and December.
Economy & Economy
Apr. 16, 2020, 2:57 pm ET
Mr. Faucher also noted that the shopping boom this spring after virus restrictions were lifted reduced “the need for year-end shopping”. Amazon’s “Prime Day,” an annual online event event, took place in October and spurred most major chains to bargain around the same time, which may have led to earlier vacation spending.
Wednesday’s report showed the sharpest declines in electronics and homeware stores, gas stations, clothing stores, department stores and bars and restaurants. The fall in apparel spending was part of a wider shift this year as many Americans stay isolated at home, don’t go to work, have postponed events, and avoid shopping at malls.
Spending in bars and restaurants was 4 percent lower than in October and 17 percent lower than last year, reflecting the strain on these establishments. With indoor eating restrictions re-enforcing in cities like New York and officials warning of a difficult winter, restaurant spending is likely to stay lower for several months. Gasoline spending also fell in November as more families opted not to travel for Thanksgiving. Many people plan to stay home for Christmas too. After months of growth, auto sales fell 1.7 percent in November.
Consumers have not followed normal shopping patterns this year, making it difficult to predict monthly sales. Some analysts didn’t expect the sales rebound to last that long for millions of Americans given the grim economic realities. By the summer, retail sales had returned to pre-pandemic levels, aided by previous business cycles, job growth and low interest rates.
However, the Christmas season, which may affect or affect a retailer’s business for the year, has been difficult to gauge. Black Friday, which traditionally signaled the start of the Christmas shopping season, was also a big bust for many retailers as cases flared up. Some companies reported that in-person traffic that day was down as much as 50 percent year over year as shoppers worried about the virus stayed away from stores. Even so, online sales were strong during the holidays, with November sales up 4 percent year over year.
The National Retail Federation, an industry retail group, pointed to the year-over-year online surge as a sign that the holiday season was off to a good start for retailers. However, in a press release on Wednesday, the organization also said additional tax incentives were needed from Congress, especially as the rest of the season remains so uncertain due to the spread of the virus.