Key takeaways:
- Top-line growth surged in June, but shoppers’ dollars flooded into the online, grocery, and home improvement channels, rather than helping previously struggling channels recover.
- Strong sales growth in the consumables-focused channels is increasingly being driven by food inflation while demand has slowed. Grocery demand is still abnormally high as many individuals continue to stay away from restaurants.
- A record number of gun purchases in June likely fed a jump in the sporting goods channel. Sales at other specialty and department stores remained well below precrisis levels.
Top-line sales for core retail jumped in June. Among the three channels not included in this core retail measure, automobile dealers (+7%) was the only one to post a gain. The others — gasoline stations (-19%) and restaurants (-26%) — posted declines though not as steep as those in the previous month. (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 sought out nonstore retailers in June to avoid the health risk of public locations. The yet-to-be released narrower ecommerce sales measure for the second quarter will post record growth based on what the monthly nonstore measure has shown.
While the vast majority of online sales for retailers, including those that have brick-and-mortar formats, are captured in these measures, some consumables purchases made through click-and-collect programs and shopping services like Instacart are captured in the channel sales below. This is one reason that brick-and-mortar stores in aggregate posted their first gain in June since March. Specialty and department stores also performed better than they did in May even though most are still down relative to February.
Supercenter, club, and small-format value: This combined channel posted similarly strong growth in June as the previous month. Costco was among the fastest-growing retailers in June based on its monthly results. Whether other big-box retailers managed above-average growth in June isn’t clear.
However, the underlying channel measures for combined supercenters and clubs (+4.3%) and the small-format value channel (+17.1%), which are available only for May, suggest discounters, more than Walmart or Sam’s Club physical locations, captured a bigger share of shoppers’ dollars relative to the months before the pandemic.
Supermarket: This channel was among the channel leaders in June, albeit slower than the previous month. Food inflation contributed to almost half of channel growth. This indicates that moderating demand dampened growth relative to the previous month.
Drug, health, and beauty care: This channel posted a softer decline in June after a record drop in May. Declining sales at beauty specialists has likely pulled down the aggregate channel measure the most. Drugstores have also struggled to grow based on May data. A spike in 90-day prescription refills during the stay-at-home period in early spring kept many drugstore shoppers away. Some of those shoppers may have started to trickle back in June.
Home improvement: Very strong growth in June was similar to the previous month. Underlying data for May indicates hardware stores and lawn and garden specialists are growing fast amid a jump in DIY projects. This is a good sign for household spending at home centers, such as Lowe’s and The Home Depot.
Apparel, jewelry, and shoe specialty: Sales in this channel continued to claw their way back in June from close to zero sales in April. Almost a quarter of the sales from a year ago still haven’t come back to brick-and-mortar stores in this combined channel. The nonstore measure, where most these retailers’ online sales are captured, is a good sign that at least some of these specialists are seeing a strong pickup in their online business.
Traditional and discount department: In this combined channel, sales in June were down only 10% from a year ago. Target and off-mall department stores likely managed flat or slightly declining growth in their physical stores in June while many mall-based traditional department store retailers continued to post what would have been a record decline prior to this economic crisis.
