Shopping recovery in California lagging behind rest of country

In-store shopping in California is suffering a prolonged hit, seeing only a small fraction of foot traffic compared to this time last year. The state is significantly lagging behind national trends, seeing virtually no recovery since May.

That's according to a new report released by San Francisco tech company Zenreach, whose technology can measure foot traffic of shoppers as they flow in and out of stores, restaurants and bars. The company's tech is installed in 10,000 locations, where its software picks up WiFi signals from shoppers' phones.

The company's national report shows retail recovery is much stronger throughout the rest of the country. Although still far below last year's numbers, shopping foot traffic has climbed from 68% of normal to 77% by early August. Nationally, retail's recovery soared past restaurants and bars, which are still seeing between 41 and 42% of their normal traffic. But in California, the state's retail traffic is hovering at 21.6% of normal. It's hardly moved since May 1, when that figure was 20.3 percent. By comparison, bars (40.5 percent) and restaurants (37.2 percent) are doing much better in the state.

Zenreach's CEO John Kelly, a former eBay executive who lives in San Mateo, said the company saw "radically different numbers" from state to state. The data seem to reflect a regional difference in consumer concerns and government-imposed shutdown orders. The differences prompted Zenreach to categorize states into two groups: cautious states and optimistic states. Cautious states included California, New York and New Jersey, while optimistic states included Texas, Florida, and Georgia.

In California, Kelly said consumer fear has tempered any return to in-person shopping, despite the shutdown orders for retail lifting in late May.

"Yes, retail is open for business, but across the board, consumers have not come back because of safety concerns," Kelly said. "That is probably the No. 1 driving factor."

Nationally, Kelly said Zenreach

found that consumer concern seemed to affect shopping and dining trends more than policies did.

"We found that consumer behavior changed before policy restrictions were put in place," Kelly said. "In California, the first shelter-in-place order came at the end of March. But traffic had dropped dramatically before they were put in place. After some of those restrictions lifted, consumers did not flock back to their former behavior. While policies play an important part, consumer concern is really the thing at play here."

While foot traffic is down from the same time a year ago, national retail sales (which include ecommerce sales) are recovering. Sales are up 1.2% in July compared to the month prior, bringing total retail figures back to pre-pandemic levels. But low foot traffic in brick-and-mortar stores remains a core driver for the parade of retail bankruptcies so far in 2020.

After producing this latest report, Zenreach has amended its earlier — far more hopeful — prediction of what's to come. In June, the company predicted that retail traffic would return to normal by September. But after the COVID-19 cases took a turn for the worse, spiking in states all over the country shortly after, the recovery stalled.

"We've seen it plateau as a country," Kelly said. "We don't see a return-to-normal date in 2020. It will probably be pushed to 2021."