EMarketer Sees Recovery Taking Years, After COVID-19 Retail Falloff
The U.S. retail sector could take “years to recover from the impact of the coronavirus,” longer than that of the Great Recession, reported eMarketer Monday, saying total retail sales will drop by 10.5% this year vs. an 8.2% drop in 2009. Analyst Cindy Liu called the current period in the U.S. “the sharpest consumer spending freeze in decades.” It will take “years before consumer activity returns to normal levels,” she said.
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E-commerce is the only “bright spot,” forecast to jump 18% this year, as Americans rely on Amazon and other e-commerce retailers for necessities. Brick-and-mortar sales will fall 14% to $4.18 trillion in 2020, said eMarketer, predicting it will take up to five years for offline sales to return to pre-pandemic levels.
Total retail sales in 2020 are likely to drop 10.5% to $4.89 trillion, a level not seen since 2016, eMarketer said. Forecasts assume widespread social distancing will continue to ease, and economic activity “slowly resumes” in Q3. Consumer spending will likely remain soft through the year, it said, not rebounding to 2019 levels until 2022; estimates throughout the forecast period will be lower than previously predicted, said the research firm.
Every category will face a drop in sales except for food and beverage and health and beauty, said the analytics firm. Total food and beverage sales will jump 12.5% this year to reach $1.11 trillion; health and beauty sales will grow 6.9% to $556.3 billion, it said.
Amazon is expected to grow its e-commerce share to 38% and “extend its reign of dominance,” this year, said eMarketer's Andrew Lipsman. Curbside pickup will push Walmart (5.8%) into the No. 2 e-commerce position for the first time, said the analyst. Along with Target, Best Buy, Home Depot and Costco, Walmart is expected to grow e-commerce sales more than 35% this year.
Fears about COVID-19 moderated as regional reopening began last month, but consumer sentiment remains “low across the board,” Cowen Washington Research emailed investors Monday.
Consumer spending intent continues to improve, Cowen said. It said about 78% of respondents canvassed May 26-30 expect to spend the same or more in coming months vs. 66% in a mid-April tracker. It was the third straight survey period where the number of U.S. consumers expecting to spend less the next month declined.
Three-quarters expected to increase their spend on groceries; 15% on cable/internet/phone services; 9% on home entertainment/media and 6% on electronics. In the May survey of 2,500 respondents, 55% said they expect the pandemic to disrupt their lives for six months or more, vs.18% in the first survey fielded at the end of March; 25% expect life disruption for 12 months or more. On average, respondents expect the pandemic to disrupt their daily life for about seven months vs. an average 6.5 months in mid-May.