Consumers showed signs of mounting a spending comeback in May, driving monthly retail sales up 17.7 percent from April’s precipitous drop.
May’s climb still falls 6.1 percent short of year-ago numbers, despite the otherwise positive development. But clothing companies have even more reason to cheer: apparel stores saw sales jump 188 percent in May to $8.12 billion from $2.82 billion in April, according to U.S. Census Bureau data, which factors in seasonal variations and holiday and trading-day differences.
As stores shut down amid the coronavirus pandemic, consumers shifted their shopping online, a trend they seemed to reverse, according to the data, one brick-and-mortar began its much-watched reopening as April drew to a close. Many discretionary retailers expect to have most of the fleet restored by the middle of July.
Sales at department stores in May saw a 36.9 percent bump to $8.47 billion from April’s $6.19 billion. General merchandise sales, including the department store sector and the retailers such as Target and Walmart, were up 6.0 percent to $59.53 billion from $56.18 billion. Overall retail sales rose 17.7 percent to $485.55 billion for the month.
“The economy kicked off in May as retailers and other businesses reopened and both stimulus money and supplemental unemployment checks fueled spending driven by pent-up demand from two months of shutdowns,” said Jack Kleinhenz, chief economist for the retail trade group National Retail Federation, warning that a “full recovery is still a long way off.”
Kleinhenz said the data must be examined in context, “because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down.” Though consumer spending seems to be in much better shape than in was even six weeks ago, he added, “it’s still far below where it was a year ago, and while the free fall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”
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Though foot traffic has steadily picked up as retailers reboot their store networks, Kleinhenz believes merchants still face considerable uncertainty ahead. “What we need to look at is the trajectory of employment and the direction of the virus. There’s hope for a turnaround in the economy in the third quarter, but if the virus has a reawakening, we’re going to see some serious situations for consumers,” Kleinhenz said.
In an interview on CNBC’s “Squawk Box,” NRF president and CEO Matthew Shay said consumers who are ready to shop, and retailers that are welcoming them back, represent the best antidote for a “sick economy.”
Still, May’s sales results “do not reflect the same strength we had going into the pandemic, but they certainly reflect the trajectory we need coming out of it,” he added. “The most important thing now is to keep these retail stores open for business and not penalize them by closing their doors in the event of a coronavirus surge.” Stores that have remained open throughout the pandemic are providing valuable lessons on safety and security for retailers just getting their shops back in order, Shay said.