Shopping on the first day of reopening of the clothing stores after the lockdown due to the Coronavirus emergency in Milan, Italy, 18 May 2020. Several countries around the world have started to ease COVID-19 lock-down restrictions in an effort to restart their economies and help people in their daily routines after the outbreak of coronavirus pandemic.Coronavirus in Italy, Phase 2, Milan - 18 May 2020

Research reports released this week not only showed the effect of pent-up demand but also how U.S. federal stimulus checks may be positively impacting sales (online and in recently opened stores). The research also revealed that the surge in e-commerce during the COVID-19 outbreak is being driven by consumers who are new to shopping online.

Other insights include evidence of an acceleration of “buy online, pick up in store (BOPIS)” efforts by top retailers and an uptick in DIY beauty, among other trends.

Despite this positive news, a “Retail Ecosystem” report from Euromonitor painted a coldly pragmatic picture of the global economic impact of the coronavirus on business, the supply chain and consumer spending — one where a baseline scenario shows a steep economic contraction.

In a research note from Telsey Advisory Group, Dana Telsey, chief research officer, said after reviewing the “key takeaways” from the latest round of retail earnings reports and calls, digital sales are clearly surging while curbside pickup “has been rolled out quickly” by the companies tracked by her firm. Telsey said sales accelerated “in mid-April when U.S. government stimulus checks came through” but quickly noted that “gross margins were worse than expected, highlighting the drag of digital fulfillment.”

But digging deep into the P&L statements and balance sheets as well as the quarterly statements, Telsey noted that “SG&A expense management was better than feared, inventory was lean for essentials retailers and heavy for discretionary retailers, and new protocols are being implemented and are likely to last for a while.”

With online sales, Telsey said, “At the risk of sounding too obvious, digital sales increased significantly for most retailers in [the first quarter of 2020], particularly since mid-March when shelter-in-place rules were implemented and nonessential retailers were forced to close stores.” She went on to say that digital did not “surge for all retailers, such as Foot Locker” and then said the data during the quarterly calls revealed some surprising trends.

“Importantly, many retailers called out seeing many new/first-time digital shoppers, and they expect to market to these new customers to drive repeat visits and make them loyal customers,” Telsey said in her research note. “Digital sales have remained strong even as stores have started to reopen. We expect much of the increase in digital penetration to hold in the new normal.”

Telsey also said the COVID-19 pandemic facilitated efforts by retailers and brands to accelerate “their BOPIS efforts to quickly implement curbside pickup. In fact, we have been surprised by the speed with which many retailers have been able to roll out curbside, as well as the speed with which consumers shifted to the offering.”

The chief research officer said time will tell if curbside pickup “will prove incremental in the new normal. One immediate concern is the impact it may have on attachment sales, which could have longer-term implications for retail real estate.”

Other insights revealed in Telsey’s report included how U.S. shoppers might be using their stimulus checks. “Interestingly, sales became more broad-based, with a surge in spending on discretionary products, such as apparel and televisions,” Telsey said. “Importantly, May started strong or improved for many retailers. We question how much of this was driven by the U.S. government stimulus versus underlying pent-up demand for discretionary items.”

In a separate “State of Spend” report from Cardlytics, which is an advertising platform able to track $5.7 million in purchases every minute, researchers analyzing year-over-year data found that for the week ended April 30, retail spending jumped 5.6 percent — which is “the highest [year-over-year] growth for any week in 2020 so far — even before most Americans began to shelter-in-place in mid-March,” the company said in their report. The jump in transactions and sales aligned with other reports, notably, The Retail Economist-Goldman Sachs (TRE-GS) Weekly Chain Store Sales Index, which has shown negative but improving sales trends as stores reopen.

Cardlytics also said other “key consumer spend trends” in in the U.S. include a spike in DIY beauty. “After an initial spike the week of [March 19], spend at online beauty stores gained significant steam, peaking the week of [April 16] with 136 percent year-over-year growth,” the company noted.

At this point, it’s unclear how retail sales will fare moving forward. As Telsey noted, e-commerce for many retailers erodes gross margins. And as companies eye the second half, a presidential election in the U.S. and swelling ranks of the unemployed could sour the holiday shopping season.

Globally, COVID-19 is already harming the economy. In the Euromonitor report, researchers at the firm said the pandemic “has forced governments to quarantine entire countries, disrupted global supply chains, slashed business and consumer confidence and affected financial markets.”

“The effects on the global economy are already being felt, and will be substantial, but the exact magnitude will depend on the length of COVID-19 restrictions,” the authors of the report said.

Euromonitor said the virus outbreak will severely impact the supply and demand sides of the global economy while, simultaneously, exhausting the fiscal policy tools aimed at thwarting a financial crisis. “Interest rates have not recovered, so central banks have to resort to Quantitative Easing programs (QEs), but QEs have limited effect on labor markets, consumer spending and other aspects of the real economy,” the researchers said.

In response, countries are eyeing fiscal stimulus measures. But with people quarantined in their homes, these measures may be limited in effectiveness. “In the meantime, governments are helping businesses and citizens by providing emergency loans to cover expenses and lower the spillover effects through economies, but uncertainty surrounding the pandemic limits economic activity,” Euromonitor noted.