Proof Points Fast Take
Consumers continue to focus on essentials from Grocery Stores.
Restaurants are anticipating a slowdown to last through the early part of 2021.
Online shopping growth continues upward.
Interest in curbside pick-up and delivery remains strong for consumers.
Consumers have spoken and the extended Black Friday/Cyber Monday deals did not deliver the lift retailers were expecting. The U.S. Department of Commerce, Census Bureau, reported seasonally adjusted sales numbers for certain retail areas declined, while online retail and grocery stores sales went up from the prior month. At least for now, most consumers are bypassing going out except for essentials and are continuing to redirect their purchases online.
However, there might be cause for some optimism for retail spending. The New York Fed Survey of Consumer Expectations examined how consumers felt about their ability to spend more in the new year than today. Looking into the future, consumers thought their spending would increase 3.73%, which was their most optimistic in the past twelve months.
Here is a breakdown from the Census Bureau for a few key retail categories:
Nonstore Retailers:
While not as strong as October, online shopping did increase 0.2% in November. This slowdown could be attributed to the extended Black Friday/Cyber Monday deals that most retailers pushed to reduce overcrowding in stores and resulted in online retailers matching the extension.
Additionally, the National Retail Federation (NRF) and Prosper Insights & Analytics’s annual Consumer Holiday Survey, revealed that 60% of consumers survey planned to make the holiday purchases online, compared to 56% in 2019.
General Merchandise Stores:
Consumers continued to shun the General Merchandise stores, continuing the decline, moving from -1.1% in October to -1% in November.
This pullback continues to reflect consumer’s growing preference for online stores.
Retail Trade:
Since the dramatic fall in the first part of the year, online sales have helped to keep the retail category in positive growth territory. However, November saw the category decline to 0.8%, its first negative decline since April.
NRF and Proper Insights & Analytics highlighted that by the end of November, consumers indicated that they had 49% of holiday shopping left to do. This means that retailers can still expect consumers to be shopping, though perhaps not to be as robust as previous years.
Department Stores:
Department stores continue to suffer from a lack of foot traffic. November fell to -7.7% from October’s -4.6%.
NRF and Proper Insights & Analytics research from their consumer survey confirmed this trend.
Grocery Stores:
Grocery stores remain a bright spot since they are considered essential for many. Either through curbside pick-up, delivery, or in-person, consumers helped raise grocery sales by 1.9% for November.
For additional insight into what consumers are thinking, Google Trends showed that in the past 90 days for the search term, “Walmart”, walmart ps5 restock, was a breakout related search query.
““Given the rising restrictions on indoor dining and the likelihood of significantly scaled-back holiday celebrations, business conditions will remain extremely challenging in the coming months,” ”
Food Services and Drinking Places:
While October was somewhat flat for sales growth for Food Services and Drinking Places, November was challenging. Sales declined -4% compared to October. Some of the decline could be attributed to reduced dining hours and revised capacity restrictions for restaurants and bars.
A recent survey from Nation’s Restaurant News showed that half of restaurant operators anticipated a staff reduction up to and possibly into February 2021, which is an indication that sales will be down for the same period.
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Sources:
U.S. Department of Commerce, Census Bureau Advanced Monthly Retail Trade Report 12/16/2020;
National Retail Federation (NRF) and Prosper Insights & Analytics’s annual Consumer Holiday Survey, 12/1/2020;
Google Trends;
Nation’s Restaurant News, 12/4/2020