February department stores sales fell a seasonally adjusted 8.4 percent from January and were down 14.5 percent from a year ago, the last full month before COVID-19 lockdowns hit the market hard. Apparel and accessories specialty stores slipped 2.8 percent between February and January and were down 11.3 percent from a year earlier.
Non-store retailers saw sales fall 5.4 percent from January, but were still up 25.9 percent from February 2020.
Overall retail and food service sales decreased 3 percent from January, according to the Census Bureau’s regular monthly tally, released Tuesday. The total take was worse than the 0.7 percent drop economists projected.
But there was also a sense that consumers are starting to make up for lost time, boosted by the promise of stimulus checks and hopes that vaccines will bring life back to normal soon. Compared with a year earlier, overall retail and food service sales were up 6.3 percent in February.
And Craig Johnson, president of Customer Growth Partners, is seeing a turn.
“The apparel/fashion market appears to be turning, after two years-plus in the doldrums,” Johnson said. “The inflection started in the third week of February, and the momentum has steadily picked up since then. This was before any impact of COVID-19 closures, which started last March 15, with most apparel and stores closing by March 18 or 19.”
Johnson previously predicted annual apparel sales would fall 9 percent this year — on top of a 23 percent drop last year — but said he could revise that upward if the recent trend continues.
But like almost everything else in 2021, it’s a complicated picture with big question marks on just when the COVID-19 pandemic will ease, when global supply chains and port jam ups untangle and just what consumers will be spending their money on.
Johnson said gasoline prices were now “a major headwind for all discretionary spending,” noting prices rose to $2.87 per gallon, up from $2.10 on Black Friday, an increase of 36 percent. There are predictions that gas prices could be as high as $4 a gallon in some regions by summer.
“Based on past gasoline and consumer spending data, each dime of pump price increase takes about $1.5 billion a month out of discretionary consumer spending, i.e. almost $12 billion per month,” he said.
Food prices are also on the rise, with food at home prices up 3.5 percent over the past year, according to a recent Labor Department report.
Meanwhile, February apparel prices fell 3.6 percent compared with a year earlier.
“Apparel is taking a smaller and smaller share of wallet every year,” Johnson said. “In 2020 apparel was only 2.6 percent of overall consumer spending, down from 4.2 percent in 2000 and 7.0 percent in 1970. The decline is not due to lower unit demand, but to long-term cost deflation, dating to early last century, when apparel was about 15 percent of total consumer spending, due to rise of automation, easier to access fabrics, lower shipping costs, etc.”
But after such a tough stretch, there are also a number of reasons to think the consumer landscape will start looking up.
Mickey Chadha, Moody’s Investors Service lead retail analyst, said, “The overall improving economic and employment picture expected in 2021, indications that the pandemic is finally abating, along with the increase in vaccine availability and the new stimulus checks being mailed out this month will all be a tailwind for overall retail sales for March 2021 and the coming months.”
So it’s headwinds and tailwinds and another stormy year in retail.
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