The retail state of play

The retail state of play

Despite a tough year, the latest data indicates the US retail sector overall has just enjoyed its fourth straight month of year-on-year gains, with the apparel sector leading the charge in September.

The news comes after a barrage of doom and gloom headlines, and as retailers ready for a holiday season like no other.

So, what’s really going on in retail, and what does it mean for the coming months? Let’s take a quick look at the current retail state of play.

Sales figures

According to data from the US Census Bureau retail sales have been steadily rebounding both month-over-month and year-over-year since June after record declines in spring courtesy of the COVID-19 pandemic.

In May, sales returned to month-on-month growth, making a jump of 18.2 per cent but remained below sales the year prior.

In June, sales returned to modest year-on-year growth of 1.1 per cent and month-on-month growth of 7.5 per cent.

July and August saw the growth trend continue, with July’s figures indicating month-on-month increases of 1.2 per cent and year-on-year growth of 2.7 per cent, while August sales grew a further 0.6 per cent on July and 2.6 per cent year-on-year.

Now, the most recent data indicates September sales figures have spiked 1.9 per cent compared to August and are 5.4 per cent higher than last year.

Noting the impressive September gains, National Retail Federation (NRF) president Matthew Shay said consumers were continuing to prove their resilience and strength despite a challenging year.

“Retailers and consumers are adapting to the current environment, embracing shopping in different ways and focusing on specific categories,” Mr Shay reflected.

Some sectors better than others

A breakdown of the statistics by the NRF indicates some sectors are performing better than others, with apparel leading the charge when it came to month-on-month gains in September.

Some sectors better than others

The NRF noted in September:

  • Clothing and clothing accessory stores were up 11 per cent month-over-month seasonally adjusted but down 12 per cent unadjusted year-over-year.
  • Sporting goods stores were up 5.7 per cent month-over-month seasonally adjusted and up 18.3 per cent unadjusted year-over-year.
  • General merchandise stores were up 1.8 per cent month-over-month seasonally adjusted and up 4.1 per cent unadjusted year-over-year. Department stores, a subset of the category, were up 9.7 per cent month-over-month.
  • Health and personal care stores were up 1.7 per cent month-over-month seasonally adjusted and up 7.8 per cent unadjusted year-over-year.
  • Building materials and garden supply stores were up 0.6 per cent month-over-month seasonally adjusted and up 23.4 per cent unadjusted year-over-year.
  • Online and other non-store sales were up 0.5 month-over-month seasonally adjusted and up 27 per cent unadjusted year-over-year.
  • Furniture and home furnishings stores were up 0.5 per cent month-over-month seasonally adjusted and up 7.5 per cent unadjusted year-over-year.
  • Grocery and beverage stores were unchanged month-over-month seasonally adjusted but up 11.5 per cent unadjusted year-over-year.
  • Electronics and appliance stores were down 1.6 per cent month-over-month seasonally adjusted and down 6.1 per cent unadjusted year-over-year.

Retail winners

While some retailers have undeniably been hit hard by the drop in foot traffic earlier in 2020, other US retailers have either pivoted to adapt or played to their strengths to enjoy a welcome boost in sales.

Retail Dive recently highlighted five of these, with some surprising verticals represented.

Retail winnersThey noted pet retailer Chewy benefitted from operating exclusively online as consumers turned their attention to their four-legged friends during a crisis.

Clothing retailer Lululemon enjoyed surprising success in the apparel retailer, which was hit hardest during the initial period of COVID restrictions. Their success lay in the shift to casual attire as more people worked from home.

Critically Lululemon noted physical stores remained integral to their success.

“Our stores are our local hub and communities across the globe, gathering spots for our ambassadors and our connection to local studios, facilitate e-commerce transactions via our ship-from-store and buy online, pick up in-store capabilities and are a portal to bring new guests into our brand, particularly men,” their CEO told Retail Dive.

Dicks Sporting Goods also performed well in the most recent quarter, despite taking an initial hit. Their rebound was largely due to the increase in people working out at home.

Meanwhile, BJ’s wholesale enjoyed growth in sales due to consumers stocking up for the pandemic, and this was accelerated by their introduction of curbside pickup.

Finally, Target was another winner in a vertical where an increase in sales was expected. Their success was above and beyond competitors however, due to e-commerce and services like same-day fulfilment and PickUp, DriveUp.

Where to from here

The NRF believes the continued uptick in sales bodes well for the holiday period ahead, but they are yet to release forecast sales figures due to the uncertainty of the current economic climate.

“We’re optimistic about the prospects for a strong holiday season, as people want something to look forward to and bring joy to their lives,” Mr Shay said.

“While it’s been a challenging year for everyone, there’s been an enormous amount of innovation within the retail industry and retailers have demonstrated that we can keep the economy open and operating safely.”

You can learn more about preparing your loss prevention strategies for the holiday season here