Street Talk: Retail sales bottom out

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Retail sales saw their biggest monthly drop on record during March as the coronavirus pandemic forced restaurants, bars and many stores to temporarily close across the nation and stay-at-home orders also impacted gasoline sales, the National Retail Federation said.

But sales soared at grocery stores and were up at other retailers deemed “essential” as well, offsetting some of the decline.

“COVID-19 has hit the retail industry unevenly,” NRF Chief Economist Jack Kleinhenz said. “This is a market of haves and have-nots. The haves are the stores that remain open with lines out the doors to buy daily necessities, while the have-nots are the stores that have closed and are taking the brunt of the impact of the pandemic. These numbers should come as no surprise given the mandated shutdown of our economy to slow the spread of the virus.”

He said the worst may be yet to come.

“March was a month that started out with many stores still open, but far more are closed now,” Kleinhenz said. “Don’t be surprised if the data going forward shows a worsening situation. Even if the economy begins to reopen in May, consumer behavior may take a long time to adjust. The road to recovery could be long and slow.”

The U.S. Census Bureau said that overall retail sales during March were down 8.7% seasonally adjusted from February and down 6.2% unadjusted year-over-year. The monthly drop is the largest ever recorded, exceeding a 4.3% decline in November 2008 during the Great Recession.

The bureau said it believed the reliability of its data had not changed “substantially,” despite the fact that many retailers whose businesses were closed were not in the office to reply to its monthly survey of sales results. But it acknowledged that retailers’ “ability to provide accurate, timely information to Census may be limited.”

NRF’s calculation of retail sales — which excludes automobile dealers, gasoline stations and restaurants in order to focus on core retail — showed March was up 1.7% seasonally adjusted from February and up 4.5% unadjusted year-over-year.

The difference between the Census Bureau and NRF numbers is because the categories NRF excludes saw some of the biggest hits. In addition to bars and restaurants being closed, gasoline sales were affected both by fewer people driving and lower gas prices while auto dealers were among those affected by stay-at-home orders.

Clothing stores saw the biggest decline among categories counted by both NRF and the Census Bureau, with sales down 50.5% from February, while furniture store sales were down 26.8% and sporting goods stores were down 23.3%. But grocery store sales were up 25.6%, general merchandise stores — which include warehouse clubs that sell both food and essential household products — were up 6.4 percent, and health and personal care stores, which include pharmacies, were up 4.3%. With more people turning to ecommerce, online and other non-store sales were up 3.1%.

Going all in

As a restaurant supplier that makes to-go ware, Budget Branders has seen the devastating effects that the global pandemic has had on the restaurant industry and is jumping in to help.

The industry that employed about 15.3 million Americans in January is now down by over 3 million jobs, about 3% of all U.S. restaurants have been forced to permanently close due to the coronavirus, and another 11% will likely close within the next 30 days, according to statistics cited by the company.

“We’ve been left heartbroken watching many of our friends and partners in the restaurant industry struggle. We realize that many restaurant workers and owners are now left to fend for themselves without any kind of income,” said Ramsey Gilbertsen, founder of Budget Branders, which is based in West Michigan.

“We wanted to help those who have been newly unemployed by COVID-19, so we devised a plan to donate 100% of our profits for April toward supporting those in need.”

Budget Branders partnered with the nonprofit World Central Kitchen for the month of April. World Central Kitchen provides chef-prepared meals to communities throughout the country that have been impacted by the pandemic. World Central Kitchen not only feeds those who are unemployed but also gives many restaurants an opportunity to get back to work in preparing food for the program.

Gilbertsen said he hopes the partnership will be a win-win, because restaurants will receive the supplies they need while families will receive the food and nourishment they may not be able to afford.

Budget Branders partners with manufacturers around the world to provide restaurants with affordable branded cups, sleeves and bags.

Media fest

Comcast reported an unprecedented shift in network usage amid COVID-19 and Gov. Gretchen Whitmer’s shelter-in-place order, but it’s within the network’s capability, and the network provider promised to continue to deliver the speeds and support the capacity customers need while they are working, learning and connecting from home. 

Xfinity WiFi hotspots in business and outdoor locations across the country are available to anyone who needs them for free — including non-Xfinity Internet subscribers — and Comcast is giving all internet customers unlimited data for no additional charge.

Comcast said it will not disconnect internet service or charge late fees for customers who can’t pay their bills during this period.

Comcast also has created new educational collections for all grade levels in partnership with Common Sense Media, as well as a collection of the most current news and information on COVID-19 on X1 and Flex.

For news junkies, Comcast’s subsidiary NBCUniversal is partnering with distribution partners to make MSNBC and CNBC available to all their video customers, regardless of the packages to which they subscribe. NBC- and Telemundo-owned stations are streaming local newscasts as well as coronavirus-related press conferences. And NBC News Now will feature programming drawing upon NBC News, MSNBC and CNBC, free to viewers.

Confidence crash

The National Association of Home Builders/Wells Fargo Housing Market Index released last week  reflects the growing effects of the COVID-19 pandemic on builder confidence for newly-built single-family homes. Builder confidence dropped 42 points in April, which NAHB said is the largest single month change in the history of the index.

John Bitely, president of Sable Homes, West Michigan third-largest home builder, said he remains optimistic about housing trends for the region because of the strong housing market going into the pandemic, but admitted he is very concerned.

“The current issue we have of not knowing when our industry can go back to work or how long the shutdown will continue as a whole for our society creates unknowns, which make it impossible to plan,” said Bitely. “Are we going to open next week, next month, or six months from now — all will make a difference on my confidence. The sooner it happens, the more confidence I will have.”

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