- [Man] Retail sales is a
measure of purchases at stores,
restaurants, and online.
This type of spending is a big deal.
Although it makes up a
relatively small portion of GDP,
it's an important driver of
economic growth because retail
sales affect more than just retailers.
They create a ripple effect
throughout the economy.
That's why analysts and
economists are paying close
attention to this monthly
indicator as a way to gauge
whether the economy at
large is recovering.
Here's how the retail
spending ripple effect works.
When consumers spend at stores,
their stores order more merchandise,
which means manufacturers produce more
and order more raw materials.
So when consumers open their wallets,
the economy tends to run smoother.
And this type of spending
adds up retail sales have been
growing for decades except for a short dip
around the last recession.
Between 1992 and 2018
retail sales have almost
tripled from $1.8 trillion
to 5.3 trillion.
This includes auto sales,
sales at clothing retailers in
general merchandisers
like department stores,
food and beverage sales, and e-commerce.
During the pandemic.
Some of these categories have
struggled more than others.
Auto sales declined sharply
as lockdown swept across the
country in March and April.
- The biggest component retail
sales is spending on new cars
and also spending on gasoline.
Now those two categories have
been really hard hit in the
coronavirus pandemic because
people are not commuting.
So they're not spending on gas.
And also because there's been
so much fluctuation in the
labor market, people that
are sort of less inclined
to buy a new car
because they might not necessarily
be sure if they're going
to have a job next month.
- [Man] Many brick and mortar clothing
retailers and department
stores saw sales all but
disappear during coronavirus lockdowns.
In April spending on clothing was down
nearly 90% from the previous year.
Neiman Marcus, JC Penny and J crew,
which were all under pressure
before the pandemic hit,
have recently filed for bankruptcy.
- Well, the coronavirus pandemic
took a huge hit on retail sales
purely because people was stuck at home.
You know, they had to stay in their houses
due to the due to the
spread of the virus.
So really the only areas
that we saw much spending
were on food.
- [Man] Sales for food and beverages,
haven't been as deeply impacted.
While spending at bars and
restaurants has gone down,
people have been stocking
up at grocery stores.
- Spending of bars and restaurants
has been hit really hard.
I mean, a lot of places did manage
to continue to provide takeout
and curbside deliver and so on.
But what we did see was a big
bump in March when people were
stocking up, you know,
they really wanted to fill
their shelves in preparation for
the shutdowns.
- [Man] Spending online
however has accelerated.
Consumers increased online purchases
in April from the same period last year,
boosting online retailers
by more than 20%.
- Well every month that
this the, you know,
the coronavirus has been on
we've seen a greater share of retail sales
at non store retailers.
Like for instance,
amazon.com for many people,
the only option that they have
to buy certain products is to
go online and spend online.
- [Man] More recently,
there have been signs that
retail might be recovering.
The retail sector lost almost
2.3 million jobs in April,
but added nearly 370,000 back in may.
- And the hope is that that
will continue as people kind of
start to get out and about and to,
to recover and to spend
more money after the,
after the shutdowns or
essentially the last phase of the
recovery will be people going
back into stores, into malls,
into enclosed spaces
and feeling comfortable.
- How confident consumers feel
about going out and spending
money safely will help determine
how quickly retail sales
might improve and ripple
around the economy.
