Key takeaways:
- Top-line sales grew rapidly in July, driven by a stay-at-home and stay-busy mindset rather than back-to-school shopping in stores.
- Apparel and department store retailers are struggling to get back-to-school shoppers into stores, but some are likely doing strong online.
- Items are flying off the shelves of discounters and other small-format value retailers even more than grocery stores and big-box consumables retailers. But sales at discounters will come to a screeching halt in August due to the expiration of increased unemployment benefits. Other consumables retailers will feel the effects, but not as badly.
Top-line sales for core retail posted strong growth for the second straight month. Among the channels not included in this core retail measure are restaurants and bars, which posted a 19% year-to-year decline in July. (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: Nonstore, including online, continued to receive a huge bump from shoppers’ avoiding some physical stores. A continued recovery in the aggregate brick-and-mortar channel, including most the specialty channels, is also notable.
Supercenter, club, and small-format value: This combined channel slowed for the second straight month. Costco's monthly results suggest this partly reflects a shift of sales among clubs and supercenters to online, which are likely captured in the nonstore channel.
The underlying channel measure for the combined supercenters and clubs (+3.5%) and which is available only for June, additionally indicates sales from in-store shoppers has moderated for these big boxes relative to May and especially April. Meanwhile, business continued to boom in store for discounters and other small-format mass retailers (+16.7%) in June.
Supermarket: This channel continued to grow at a double-digit pace, but, unlike in the early spring, about half of its growth came from food inflation. Demand, nevertheless, remained stronger than the months prior to the pandemic.
Drug, health, and beauty care: This channel posted growth for the first time since March. The pandemic has hit beauty specialty stores hard. Drugstores likely managed growth for the second straight month in July.
Home improvement: Growth moderated in this channel in July, but still points to the strongest summer for home improvement retailers since 2004. Surging growth in the underlying lawn, farm, and garden specialty channel in the previous month indicates outdoor home projects are helping to keep households busy. The National Association of Homebuilders indicates homebuilders also saw a jump in activity in July.
Apparel, jewelry, and shoe specialty: Sales in this channel continued to post significant month-to-month gains. Sales in these physical stores are still only 80% of what they were a year ago. At least some of these sales have shifted to the nonstore channel, where most of these retailers’ online sales are captured by the government.
Traditional and discount department: This channel continued to struggle in July, indicating that back-to-school shoppers passed it over or that more of its shoppers went online. Target, combined with other off-mall department stores, likely posted slightly declining in-store growth based on June data. Sales at traditional department stores, which are mostly mall-based, are only two-thirds of their year-ago level.
