Key takeaways:
- The record top-line decline partly reflects a broader rollout of government policies to close nonessential businesses in April.
- Spending on consumables remained abnormally high but faded relative to March. This trend was evident in the grocery channel. However, drugstores posted an outright decline in April.
- A decline in general merchandise seem to outweigh historically high consumables sales in the mass channels.
- The nonstore channel accelerated in April, but most soft goods and home goods retailers likely haven’t recouped the vast majority of lost in-store sales through their online banners.
Top-line sales for core retail posted a record decline in April. The three channels not included in this core retail measure, gasoline stations (-40%), automobile dealers(-34%), and restaurants (-49%), fell at an even faster pace. (Channel retail sales data from recent months is available at the end of this piece. Kantar Retail IQ clients can access more charts.)
Nonstore vs. brick-and-mortar: Shoppers accelerated their online spending in April partly to replace some in-store spending that was limited by the closure of nonessential businesses. Some consumables purchases made through click-and-collect programs and purchases made through shopping services like Instacart are captured in the channel sales below. This suggests the shift toward ecommerce may be even more pronounced than this measure indicates.
Supercenter, club, and small-format value: This combined channel posted a decline in April, reversing from a surge in growth in the previous month. The underlying measure for supercenters and clubs (+15.3%) available only for March shows that stocking up on essentials lifted them to their strongest growth since 2003. Based on results for the grocery channel and Costco, April likely saw some moderation in consumables spending at big-box mass retailers, albeit still much higher than year-ago levels, and a decline in most general merchandise categories.
The small-format value channel, also reported with a one-month lag, outpaced most its big-box competitors in March (+18.3%). While slower April growth was likely due to less stocking up, this channel is expected to be more resilient given its price orientation and higher share of consumables than big-box mass.
Supermarket: This channel remained in high gear in April even though it downshifted from record growth in March. A jump in food inflation in April suggests demand growth slowed even more than the nominal sales measure but remained higher than average. Ahold Delhaize and Publix reported double-digit growth in their fiscal first quarters through March. Kroger is experiencing a similar jump in growth based on reports of employee bonuses and increased hiring in March, but exactly how its performance compares with other consumables retailers isn’t clear.
Drug, health, and beauty care: This channel posted a record decline, partly because beauty specialty stores were classified as nonessential businesses and had to close. In the previous month, the narrower drugstore channel posted a 12% gain. CVS reported strong growth in the quarter that includes March. But the broader channel measure reported for April suggests that any lift from shoppers stocking up at CVS and other drugstores was only temporary. Further evidence comes from ShopperScape®, which showed a smaller share of individuals shopped drugstores in April.
Home improvement: Channel sales were close to flat relative to a year ago in April after solid growth in the previous month. Most of these “essential” retailers remain open, but the channel likely faces declining sales among pro shoppers due to a fall in lumber prices, fewer large remodeling projects, and a sharp decline in housing starts. A relatively more resilient household shopper will help home centers, such as Home Depot and Lowe’s, from declining as sharply as building supply specialists.
Apparel, jewelry, and shoe specialty: Sales in April almost completely dried up with many of these stores temporarily closed. It’s unclear the extent to which some of these sales moved to these retailers’ online banners, but its likely most shopper demand for softgoods was delayed or lost.
Traditional and discount department: In this combined channel, sales fell to about half the levels achieved last April. Data available only for March indicates discount department stores aren’t declining nearly as steeply as traditional department stores, partly because some discount department stores, such as Target, fit the government’s definition of essential businesses and sell consumables.
