Key takeaways:
- Top-line sales grew strongly on a year-to-year basis even though it was flat month to month.
- August’s positive trend supports Kantar’s just-released holiday forecast for higher growth in the holiday fourth quarter relative to a year ago despite shoppers pointing to less gift giving this year.
- Expiration of temporarily increased unemployment benefits in July didn’t seem to dampen sales at value-focused consumables retailers. One reason may be shoppers shifting some demand out of the grocery channel and to more price-focused consumables retailers.
- Home improvement outpaced all other brick-and-mortar channels.
- The recovery at department stores ceased in August, well short of last year’s sales levels, perhaps due to the weak back-to-school shopping season.
Top-line sales for core retail posted similarly strong growth for the third straight month. Among the channels not included in this core retail measure are restaurants and bars, which posted a 15% year-to-year decline, less than the 19% decline 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: Nonstore, including online, growth persisted at a very strong pace. The aggregate brick-and-mortar channel posted similar growth to the previous month, even besting the year-ago period.
Supercenter, club, and small-format value: This combined channel matched the previous month’s growth, signaling there wasn’t an immediate impact on sales at value-focused consumables retailers after temporarily increased unemployment benefits expired at the end of July. The split between small-box value retailers and big-box mass retailers in August is less clear. Data available only for the previous month indicate the small-format value channel (+13%) widely outpaced the brick-and-mortar growth of warehouse club and superstores (+3.7%).
Supermarket: This channel decelerated to its slowest pace since the health crisis catalyzed consumables demand in March. Food inflation grew at the same pace as the previous month, suggesting demand growth eased in this channel.
Drug, health, and beauty care: Growth in this channel ramped up to its strongest pace since early 2019. Data from the previous month indicates drugstore growth is surging probably due to pent-up demand from the spring when individuals avoided nonessential doctor’s visits and used more 90-day prescriptions to get through the lockdown period. Incremental demand for allergy medicine and household products are also likely supporting growth.
Home improvement: This channel continued to lead most other retail channels in growth outside of online. Households and homebuilders are staying this busy this summer as homeowners renovate indoor spaces, tackle outdoor DIY projects, and buy new homes to adjust to staying home more.
Apparel, jewelry, and shoe specialty: A string of monthly gains in this channel since the economy reopened in May hasn’t been enough to make it close to whole. Sales in these physical stores are still only 80% of what they were a year ago. Even after accounting for the online sales tied to these retailers’ parent companies, the channel is still falling short of its year-ago sales level.
Traditional and discount department: This combined channel lost traction in August, posting an even steeper decline than the previous month. Traditional department stores likely contributed to most of the decline based on data released for the previous month. The brick-and-mortar performance of discount department stores, such as Target and Kohl’s, has been more resilient although a soft back-to-school season may have dampened all department store sales in August relative to July.
