Key takeaways:
- Even with a return to top-line retail sales growth, modest growth is expected in the coming months as high unemployment remains.
- Online and home improvement were among the biggest beneficiaries of stimulus checks that went out starting in mid-April.
- Shoppers were slow to come back to the brick-and-mortar soft goods specialty and department store channels. Heavy apparel discounting is also slowing the recovery for these channels.
- Spending on consumables likely remained historically high based on double-digit growth in the grocery channel. The weak recovery among restaurants, even after many partially reopened in May, is likely the biggest reason for high food sales.
Top-line sales for core retail posted growth after a record decline in the previous month. The three channels not included in this core retail measure, gasoline stations (-31%), automobile dealers (-5%), and restaurants (-39%), continued to decline. (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: Online and other nonstore sales posted a record increase, while brick-and-mortar sales declined for the second straight month. Notably, 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 jump in nonstore growth was likely driven more by homegoods and softgoods purchases even among retailers that also have a brick-and-mortar presence.
Supercenter, club, and small-format value: This combined channel picked up speed in May after slowing in the previous month. Costco was among the mass retailers that regained its footing in May.
The underlying measure for supercenters and clubs (+3.0%), which is available only for April, indicates sales temporarily slowed after shoppers stocked up heavily in March. The small-format value channel (+7.9%), also reported with a one-month lag, grew much strong than its big-box counterparts in April. A relatively higher share of general merchandise sales at supercenters and clubs than at discounters made up for at least some of the difference in performance.
Supermarket: This channel posted double-digit growth for the third straight month, suggesting shoppers continue to purchase an abnormally high level of consumables categories. High food inflation also contributed several percentage points to channel growth.
Drug, health, and beauty care: This combined channel posted a record decline in May, topping a steep decline in April. In the previous month, the narrower drugstore channel posted flat growth. The spike in 90-day prescription refills during the stay-at-home period has kept some drugstore shoppers away until at least June. The continued steep decline in the overall channel in May also suggests many shoppers didn’t immediately return to Ulta and Sephora after they reopened.
Home improvement: Channel sales in May jumped to their strongest growth since 2004. Shoppers cashing in on their stimulus checks likely boosted growth. These retailers were also open throughout May and the previous months because they were considered essential businesses. Join us for a deep-dive into implications during our upcoming Home Improvement Virtual Event.
Apparel, jewelry, and shoe specialty: Most sales in this channel were still absent in May even though some of these retailers’ physical stores reopened in the second half of May. The jump in the aggregate nonstore channel, which captures most of these retailers’ online sales, is a good sign that some of these sales migrated to retailers’ online stores. This didn’t seem to be the case in March and April.
Traditional and discount department: In this combined channel, sales represented only 75% of what they did a year ago.
