U.S. retail sales continued to recover from the pandemic’s impact on consumer spending in July, and shoppers still turned to the web in record numbers despite stores having reopened, new U.S. Department of Commerce data shows. While nonstore growth slowed a bit from the all-time high in June, figures suggest the seismic shift to ecommerce persists as the coronavirus shows no signs of abating.
Nonstore sales surged 26.7% year over year in July
In July, consumer spending through nonstore channels decelerated compared with June but still swelled 26.7% year over year, according to a Digital Commerce 360 analysis of the Commerce Department’s advance monthly figures released Friday. Numbers exclude estimated fuel sales. The July surge is the second-highest year-over-year rate of any month in recorded history, falling behind only June 2020’s revised 32.4%. In fact, four out of the five highest-ever year-over-year monthly growth rates fell during the COVID-19 period.
July’s nonstore sales jump was substantially higher than the 19.4% growth registered in July 2019. Last month, growth in the nonstore channel accounted for more than half–53.3%–of all retail gains.
The Commerce Department’s nonstore sales–which are mainly online but include other sales such as orders through call centers, catalogs, door-to-door visits and vending machines–don’t align perfectly with spending captured in the pure ecommerce figures that the agency releases quarterly. But the data is an early indicator of trends in the online sector. Digital Commerce 360 analyzes non-seasonally adjusted Commerce Department numbers.
Online sales remain strong during pandemic
Ecommerce data collected by a number of industry experts align with the Commerce Department’s findings.
“While spending may have softened this past month, it is still growing,” says Frank Poore, CEO of ecommerce software provider CommerceHub.
In July, the online order volume across CommerceHub’s network of retail clients remained around all-time highs, which is “a clear indication that a shift in how consumers buy things as the COVID-19 pandemic continues is here to stay for the foreseeable future,” Poore says. “Simply put: Consumers feel safer shopping online rather than in store.”
Adobe Analytics, the data insights arm of software company Adobe Inc., also reported significantly higher online sales last month, although online spending surges continued to decelerate from earlier in the pandemic. Web sales grew 55% in July over the same month in 2019, according to Adobe. That’s down from a 76% year-over-year jump in June, in part, because falling employment levels and looming cutbacks in unemployment benefits have left households tightening their belts, says Vivek Pandya, senior digital insights manager at Adobe.
Adobe’s data is based on more than 1 trillion anonymous online visits to retail sites, including 80 of the top 100 retailers in the Digital Commerce 360 Top 1000, and covers more than 100 million SKUs.
According to fulfillment data from Convey, a last-mile technology vendor, retailers’ shipment volume was up only 14% year over year in July. But that’s likely because July 2019 figures captured a surge in orders over Amazon Prime Day, a summer sales event run by Amazon.com Inc. that didn’t occur this year because of the coronavirus, says Carson Krieg, co-founder and director of strategic partnerships. Although Convey doesn’t have access to Amazon shipment data, the halo effect for other retailers that typically run competing promotions to siphon business from Amazon in July would be captured, and Krieg says the month’s uptick in orders would have been more pronounced had Prime Day taken place this July.
Convey’s data is based on tens of millions of packages shipped from more than 500,000 U.S. locations across the company’s client base. The vendor has 130 retail clients in many merchandise categories, including retailers The Home Depot Inc. No. 5 in the 2020 Digital Commerce 360 Top 1000; Neiman Marcus, No. 41; and Eddie Bauer LLC, No. 139.
The Commerce Department is scheduled to release pure ecommerce spending data for the second quarter of 2020 on Tuesday, Aug. 18, when COVID-19’s continued impact on online sales will come more into focus.
Total sales continue to rebound
Total retail sales through all channels for Digital Commerce 360-defined segments rebounded for the third straight month in July after taking a serious tumble in April. In July, total retail spending rose 10.1% year over year, marking the third-highest growth rate for any month in recorded history but a slight slowdown from June’s revised 10.3%. Additionally, July’s uptick was nearly double the 5.7% increase for the same month in 2019.
Digital Commerce 360’s calculation of retail sales–which excludes sales in sectors that don’t typically sell online such as restaurants, bars, automobile dealers, gas stations and fuel dealers–differs from overall Commerce Department data as many omitted categories have been among those hardest hit during the pandemic.
Stores were largely closed in April, the first full month of business closures and widespread stay-at-home orders, and total retail sales dropped 5.4% from the same period in 2019. That was the largest year-over-year decline of any month outside of the Great Recession. But since, total spending began to climb again, inching up in May and making notable gains in June and July.
“Retail sales are starting the third quarter on a solid footing considering the nosedive we saw this spring,” says Jack Kleinhenz, chief economist at the National Retail Federation. “But we have to remember that there’s uncertainty about economic policy and that the resurgence of the virus is putting pressure on the fledgling recovery.”
The NRF is pleased with shoppers’ resilience leading the strong economic turnaround over the last few months, the organization says. But as the industry looks toward the second half of the year, there’s “huge” uncertainty surrounding forecasting, Kleinhenz adds.
“While households are spending, they are anxious about their health and economic well-being, so they are being pragmatic,” he says. “What happens with the economy comes down to what the coronavirus allows us to do.”