‘Hideous’ April Menaces U.S. Retailers That Lost 98% of Traffic

(Bloomberg) -- American retailers had a historic collapse in March. April may be much worse.

U.S. retail sales plunged 8.7% from February, the worst drop on record, as the nation’s malls and store networks went dark in response to the coronavirus outbreak. With furloughs and layoffs spreading across the industry, more than 1.4 million retail workers are without paychecks.

For as bad as the numbers were, March still had some pre-lockdown weeks. In April, stores will likely be closed for the full month, and the pain will be exacerbated by a sharp rise in unemployment and falling consumer confidence.

“The whole month looks like it will be a write-off for retail, with stores remaining closed for the duration,” Neil Saunders, an analyst at GlobalData Retail, wrote in a note to clients Wednesday. “As ugly as March was, it appears to be a prelude to a hideous April.”

Stores were open for the first two weeks of March, though foot traffic had started to fall, according to location-data provider Prodco. They began closing on March 14, a few days before states issued their first stay-at-home orders. Several major apparel and jewelry chains didn’t shut their doors until March 22 or later.

As a result, April’s store visits will be almost entirely restricted to supermarkets, pharmacies and big-box retailers like Walmart and Costco. Traffic across retail has fallen 98%, according to Prodco.

Clothing stores, which reported a 51% drop in March, will be particularly hard hit, with furniture and home-furnishing retailers also poised for a deeper decline on top of last month’s 27% drop. Shoppers are largely eschewing those products in favor of buying essential items such as food, beverage and consumer staples.

‘Enormous Hit’

Some spending has moved online, but it’s “nowhere near enough” to offset the near-total disintegration of store sales, said Saunders. “The sector has already taken an enormous hit and needs to be braced for more of the same over the coming months.”

The National Retail Federation, an industry lobbying body, echoed the sentiment.

“March was a month that started out with many stores still open, but far more are closed now,” NRF Chief Economist Jack Kleinhenz said. “Don’t be surprised if the data going forward shows a worsening situation. Even if the economy begins to reopen in May, consumer behavior may take a long time to adjust. The road to recovery could be long and slow.”

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