Macroeconomics Insight Center

Key takeaways 

  • Shoppers surveyed through ShopperScape® around the time the stock market selloff began in late February signaled they were keeping their spending plans steady.
  • Top-line retail growth benefited a great deal from a comparison to very weak growth in the year-ago period when the government shutdown dampened growth.
  • Stock-up sales related to COVID-19 which began in the last week of February may have contributed some to growth in the mass and supermarket channels, but didn’t seem to lift the drugstore channel. There seemed to be only neutral effect on specialty and online channels early on in the crisis.

Top-line retail growth that excludes the food service channel, automobile dealers, and most gasoline stations posted improved year-to-year growth in February although it didn’t grow significantly from the previous month. The different trends reflect a comparison to exceptionally weak growth last February for several channels. Here’s a summary and analysis of February channel performance. (Channel retail sales data from recent months is available at the end of this blog. Kantar Retail IQ clients can access more charts at this link.)

Nonstore vs. brick-and-mortar: Shoppers increased their in-store and online spending in February relative to a year ago. Nonstore growth was moderate for the second-straight month after a very strong December and year-ago period. The narrower online channel results released only for the fourth quarter (+16.4%) indicate online drove most the growth in the broader nonstore channel over the holiday. The government measure may indicate online growth for some retailers has moderated in February, but in-store growth has improved slightly. (Most retailers’ online sales are captured in this channel, not just pure-play online retailers.)

Supercenter, club, and small-format value: Growth in this channel jumped to an eleven-month high in February. The broader channel measure suggests that growth in the warehouse club and supercenter channel, reported with a one-month lag, led the majority of channels for the second-straight month. Costco posted very strong February results  and it cited stock up purchases related to COVID-19 as boosting February growth approximately three percentage points. Stocking up may have also boosted results at Walmart in February which reported slower growth for its fiscal quarter through January.

The small-format value channel, which is reported with a one-month lag, has found itself falling flat in recent months. Fred’s bankruptcy has been a drag on growth, but even key discounter banners, Dollar Tree and Family Dollar, managed only modest growth in the three months through January. Dollar General grew strongly during this period partly by adding a large number of stores. It’s doubtful these small-box discounters received as much of a bounce from shoppers stocking up in February as their big-box value competitors, but we will see in the government’s report released in April.

Supermarket: This channel posted stronger growth in February, partly due to a comparison to weak growth last February. This might indicate Ahold Delhaize or Kroger are off to a stronger start in their fiscal first quarters after they posted positive, albeit modest growth in their fourth quarter. Meanwhile, Publix will look to continue leading the channel average after doing so in its fiscal fourth quarter.

Drug, health, and beauty care: This channel slipped to meager growth in February, suggesting there was very little lift from purchases related to COVID-19 in February. While Walgreens store closures may have dampened growth in the channel it’s worth noting that growth has been sluggish at Walgreens and Rite Aid even on a comparable store basis due to these drugstores’ inability to grow front-store sales. CVS has fared better.

Home improvement: Channel sales posted above-average growth on top of flat growth a year ago. The turnaround likely reflects a rebound in housing starts and lumber price inflation. These at least suggests pro shoppers at home centers, such as Lowe’s and Home Depot, were buying more in February. It’s less clear how much bulk purchases of household essentials are lifting these retailers’ sales.

Apparel, jewelry, and shoe specialty: Growth was modest in this combined channel in February. Based on data available only for the previous month, specialty clothing and jewelry stores likely posted growth off steep declines a year ago.  

Traditional and discount department: A decrease in this channel was similar to the previous month’s steep decline. This suggests most department stores haven’t regained traction in their fiscal first quarters although store closures at Macy’s may be masking improvement among select department stores, including Target. (KRIQ clients can access this report for a round up of key apparel and department store results in the fourth quarter.)

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