Decline in U.S. Retail This Year Set to Far Outstrip Great Recession
Click here to read the full article.
Increased online shopping amid the coronavirus pandemic isn’t coming to save retail this year.
Retail sales in the U.S. overall, including in-store and online, are expected this year to fall by 10.5 percent, according to research and analysis firm E-marketer. Before the coronavirus pandemic took hold of the U.S. in March, the firm projected that retail sales would actually rise by 2.8 percent in 2020 to $5.62 trillion, compared to $5.46 trillion in 2019.
The downward projection means U.S. retail overall is expected this year to lose $573.57 billion in sales, bringing the expected annual number to roughly $4.9 trillion. A reduction by 10.5 percent this year will leave the impact on retail worse than that seen between 2008 and 2009, the peak of the Great Recession, when overall retail sales fell by about 6.4 percent, according to U.S. Census Bureau data.
But as E-marketer put it in a note, “The news isn’t dire for all retail channels.” The company projects shopping online, including items for curbside pickup, will grow another 18 percent in 2020, after increasing 15 percent last year.
The firm added that e-commerce growth “reflects a notable increase in both the number of digital buyers and the average spending per buyer.”
The sizable growth in e-commerce is also driven by curbside pickup, or “click and collect,” options, which is expected to grow by 60 percent this year to account for $58.5 billion in retail sales. E-commerce is also growing more than ever among shoppers aged 65 and up, with that age group increasing by 12.2 percent among online shoppers, E-marketer has found.
It also appears likely that at least some of this behavior will remain, even as in-store shopping has been allowed to resume in nearly every U.S. state for several weeks now. According to an analyst note from RBC Capital Markets focused on apparel retail, in-store foot traffic has declined another 2 percent in recent weeks after “building sequentially since April,” signaling that the new resurgence in coronavirus cases has again quelled shopping. Year-over-year so far, foot traffic is down 52 percent.
And growth in e-commerce appears to be going almost entirely to the biggest retailers in the country, like Amazon and Walmart, which were excluded from state-mandated business closures in the first several weeks of the pandemic. Experts predicted as much to WWD in early April, when Amazon, Walmart, Costco and Target were essentially the only major retailers in operation, leaving the public dependent on them for lockdown essentials that could hardly be kept in stock.
Amazon’s business is projected to increase almost 22 percent this year, to just under $270 billion, leaving it in the number-one spot among the biggest online retailers in the U.S. Walmart will take the number-two spot for the first time, at a projected $41 billion in online sales. Rounding out the top five are eBay at a projected $31.6 billion in sales; Apple with $24.8 billion, and Home Depot with $13.4 billion.
Such massive numbers are still small compared to e-commerce in China. Alibaba is projected to exceed $1.1 trillion in online sales in China, followed by JD.com with $357.7 billion and Pinduoduo with $218 million. China is also poised this year to surpass the U.S. for the first time as the world’s largest retail market.
Given the nation’s much stricter initial economic and public lockdown due to the coronavirus, China on the whole is seen as being able to bounce back more quickly than the U.S., which has failed to set a single measure to combat the coronavirus pandemic at the federal level. Instead, the Trump Administration left it up to individual states any measures to slow the speed of the virus, leaving the U.S. with a hodgepodge of mandates and enforcement efforts, and then state leaders taking it upon themselves to lift those measures. This uneven effort, along with mixed messaging regarding the virus from local and federal officials, as well as President Trump, has led to a widespread resurgence of citizens becoming ill and being hospitalized.
The U.S. now leads the world in the number of people infected by the virus at more than 3.4 million and at least 137,000 deaths from the virus, according to Worldometer, which analyzes data from the United Nations and nations’ governmental health databases.
For More, See:
All the Fashion Companies That Got PPP Loans
Europeans Souring on American Brands Over Coronavirus
Amazon Workers Sue Claiming Coronavirus Mishandling
Sign up for WWD's Newsletter. For the latest news, follow us on Twitter, Facebook, and Instagram.
