With the skyrocketing figures of COVID-19 cases around the globe, the US seems to be the worst hit with ~0.7 million confirmed cases and more than 30K deaths.
Coronavirus pandemic has affected 54 countries and territories in the US, as directed by PAHO Director, Dr. Carissa F. Etienne. As suggested by her, abiding physical distancing measures is need of the hour to combat the virus spread. Dr. Etienne understands that the economic and political consequences of implementing these measures can be disruptive. However, she states that failure to do so would increase the risk of the prevailing crisis.
The degree of upheaval wrought by coronavirus differs across the industries, with hard hit segments including tourism, travel and hospitality witnessing widespread layoffs amidst cost-cutting and business survival initiatives.
The US economy is facing changes in its economic landscape, with tourism being the main financial driver for some states such as Florida. The US retail sector has felt a major upend witnessed by the falling sales. Moreover, the COVID-19 induced impact is skewed towards retail of some of the non-essential sectors.
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Lens on US Retail Sector
In 2017, the total US retail sales exceeded $5 trillion from its retail establishments. The direct employment in the US retail industry was nearly 29 million with ~42 million of supported jobs.
Amidst virus tragedy, the US retail sector has felt massive pinch from the lockdown measures adopted by the nation, with several business operating on limited capacity/ ceased operations.
Below is the snippet of recently released retail data for the US economy:
- Dip of 8.7 percent compared to previous month, the biggest dip noted since 1992 when Government started tracking the series, while core retail sales dropped by 4.5% against the expectation of 4.9%.
- Total retail sales fell from USD 531.6 million in January 2020 to USD 483.1 million in March 2020, marking a fall of 9.1 percent.
- 6.2 percent fall in March 2020 compared to previous corresponding period
US retail space has witnessed tremendous blow with closed restaurants, malls, stores and pubs, control over non-essentials sale, amidst people’s preference for stay at home amidst health concerns and government’s direction. Soaring unemployment claims topping 22 million and lower capital availability affecting the demand scenario has further crippled the retail space.
Moreover, Americans are increasingly shifting towards digital services for groceries and other essentials, rather than conventional means to visit the stores.
Retail Data: Winners vs Losers
Clothing & Accessories seem to be the worst hit while analysing the retail store sales by different categories. While, the retail store sales for food & beverage category increased by 25.6 percent in March 2020 on a monthly basis. (as indicated in the chart below)
Other categories that witnessed a plunge in retail sales ranging from 23 to 27 percent are furniture & home furnishing; food services & drinking places; motor vehicle & parts; and sporting goods, hobby, musical instrument & bookstores.
Gasoline stations, electronics & appliances, and other miscellaneous retailers have seen a dip of sales ranging from 14 to 18 percent.
However, coronavirus outbreak favored retail sales of some categories, including Food & beverage that reported USD 82.1 billion of retail store sales in March 2020 compared to USD 64.1 billion sales in March 2019.
Within food & beverage category, the grocery stores sales were USD 74.2 billion in March 2020, an increase of 29 percent on PCP.
Other categories of retail sales with decent March 2020 figures were building materials & garden equipment; non-store retailers; health & personal care; and general merchandise.
Some of the major retailers that seem to be better positioned to survive the hardship generated from coronavirus include Walmart Inc., Target Corporation, The Kroger Co. and many others. Instead, these retailers mention that as the crisis is evolving, they are experiencing an opposite effect than on economy. They have an unusual solid sales and footfall in their stores as well as via online means.
Other Latest US Economic Parameters
- March Empire State Manufacturing Index reported to be -78.2, against previous month -21.5.
- March industrial production noted a decline of 5.4%, against previous month’s increase of o.5%.
- Philly Fed Manufacturing Index recorded at -56.6 against market expectation of -30.
To overcome the overall impact of coronavirus driven crisis, the US government and Fed like many other economies are implementing financial and economic rescue packages. The virus containment, possible flattening of the curve and phased opening of the economy is expected to bring some relief to the economy and retail space in particular.