Retail Sales and E-Commerce

Coronavirus can’t stop consumers

Thoughts

If your economy runs on consumption, a pandemic that causes people to stay home should be a pretty big deal. But, with the exception of a few months during the initial virus peak, it really hasn’t been. Recently, retail sales have been up on a year-over-year basis.

The dominant narrative is that online shopping has saved the economy. Everyone is just buying stuff while sitting at home. But online sales as a percentage of total sales only went up from 11.8% in 2020Q1 to 16.1% in 2020Q2. Even in the middle of a pandemic, the majority of purchases were still in person. So much for quarantining, I suppose.

While retail sales recovered on a year-over-year basis after the first wave, is that really surprising when people bought so little during the initial shutdown? There was a lot of pent-up demand and the best we got was close to break even on the trend for sales - not a big bounce.

Going forward, what will the winter look like? The holiday period is so important for the economy and this year will be very different for many families. I don’t think we should expect anything normal. With so many out of work, the economic recovery slowing, and the virus still rampant, there are significant headwinds on consumption in Q4. It would be difficult to match the ugliness of March and April but it certainly won’t be business as usual.

Metrics

Retail sales have recovered from the coronavirus shock

Online shopping continues to grow

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