Retail sector shows signs of life in May
Will rebound last after pent-up demand, and government aid, is gone?
Whitney Wedded said closing her business at The Greene Town Center for 12 days due to coronavirus restrictions drastically hurt her bottom line but since opening back up with curbside service at first, profits have steadily been growing.
Winans Chocolates and Coffees is part of a retail sales rebirth seen nationwide last month. U.S. retail sales jumped by a record 17.7% from April to May during the coronavirus pandemic that has flattened the economy and paralyzed consumer spending.
The government’s report Tuesday showed that retail sales have retraced some of the record-setting month-to-month plunges of March (8.3%) and April (14.7%) as businesses have reopened. Still, the pandemic’s damage to retail sales remains severe, with purchases still down 6.1% from a year ago.
Last month’s bounce-back comes against the backdrop of an economy that may have begun what could be a slow and prolonged recovery. In May, employers added 2.5 million jobs, an unexpected increase that suggested that the job market has bottomed out. Still, a big unknown overhanging the economy is whether early gains in job growth, retail sales and other areas can be sustained over the coming months or whether they may plateau at a low level.
“This may very well be the shortest, but still deepest, recession ever,” said Jennifer Lee, a senior economist at BMO Capital Markets. But she added that it’s “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”
On May 12, Gov. Mike DeWine initiated the reopening of Ohio retail businesses from coronavirus closings.
In order to reopen, businesses had to follow the Ohio Department of Health’s guidelines, which required employees to wear masks, sanitize the workplace, limit capacity and more.
Wedded, who has now opened her business to shoppers, said she had to go to curbside pickup because she needed to pay rent. Wedded said opening back up for to-go orders turned out to be a good thing for her business, and the store is doing even better now that The Greene has opened back up.
“We are actually very close to where we would have been before,” Wedded said, “so it has definitely changed in the last two weeks.”
Elizabeth Autio, lead assistant manager of Jake’s Toggery at The Greene, said they were closed for six weeks, opening back up on May 4 only for curbside pickup and in-store appointments.
As Ohio retail opened back up to shoppers, Autio describes it as “one of the best weeks” of her life.
Many safety precautions are in place, like store capacity limits, social distancing floor markers, mandatory use of masks and more.
Wedded said Winans is following the guidelines through practices like spacing tables six feet apart, using gloves, requiring employees to wear masks and disinfecting high traffic areas every 30 minutes.
Autio said Jake’s Toggery has hand sanitizer throughout the store, is limiting capacity to 10 people and is wiping down surfaces cus- tomers touch.
According to a recent study by Cambridge Retail Advisors, 83% of executives feel that retail and dining will be changed forever, and 56% say the pandemic has per- manently changed the way people shop.
This can be seen at The Greene, where several retailers like the Apple store and clothing stores have not reopened yet to the public.
“We’re just glad to be back for sure,” Wedded said. “I’ve been able to bring all the employees back one at a time.”
“It is a different experience for sure,” Autio said. “It’s the new normal, but we’re all just happy to be back.”
May’s rebound was likely aided by the $3 trillion in rescue money that the federal government has provided to companies and house- holds. Retail sales would need to surge by an additional 9% to return to their level before the pandemic.
Any sustained recovery, though, would hinge on whether a second wave of infections erupts and causes consumers to retreat. It will also depend, in part, on whether the government approves further aid to individuals, companies and state and local governments.
“While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound,” said Gus Faucher, chief economist at PNC Financial Services. “It will depend on a number of factors, including the path of the coronavirus, how willing consumers are to be in public, how many businesses manage to stay open and how many laid-off workers they rehire, and whether the federal government provides additional stimulus.”
This article contains information from The Associated Press.