Author: David Templeton, CFA, Principal and Portfolio Manager
This past week's advance report on retail sales for June shows sales increased at a .6% rate versus May and a 18% increase on a year over year basis. Total retail sales for June equaled $621.3 billion. Non store sales totaled $88 billion while brick and mortar sales totaling $533.4 billion as seen in the below chart.
The economic shutdown that resulted from the pandemic was a significant benefit to non-store or e-commerce type sales. The blue line in the above chart shows the steep contraction in brick and mortar retail at the start and through the pandemic. Some of this decline in brick and mortar sales moved to online sales as seen with the the increase in the green line above.
With the worst of the pandemic seemingly in the rearview mirror, individuals locked down during the pandemic now desire to get out of their homes and are frequenting brick and mortar retail at a higher pace. The below chart shows since the end of the recession caused by the bursting of the technology bubble in 2002, the growth rate of non-store retail sales exceeded brick and mortar sales for nearly twenty years until March of this year. Since March 2021 though, the growth rate of brick & mortar sales has far out paced non-store sales growth as seen below.
The below table taken from the U.S. Census Bureau's retail sales report highlights categories of sales experiencing significant increases. Even on a month over month basis most of the category percentage increases exceed the non store category increase. On a year over year basis clothing store sales are up 47.1%, auto sales are up 21%, electronics and appliances up 37.3% and home furnishings up 17.1%.These increases show the strength of the consumer and their effort to satisfy pent-up demand. At least for the time being, brick and mortar retailers have an advantage in the eye of the consumer.
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