Since social distancing measures went into effect in mid-March to mitigate the spread of Covid-19 in the country, nearly 36.5 million Americans have filed unemployment claims. As businesses remain shuttered and most people remain indoors (either out of fear or necessity), the unemployment rate is steadily inching toward the Great Depression’s historic peak of 24.9%.
Joblessness, brick-and-mortar closings and lockdowns have also caused consumer spending in the retail sector to tumble, dropping 16.4% this April from the previous month, according to advanced estimates released by the U.S. Census Bureau. It’s the steepest decline since the agency began tracking retail sales in 1992. Compared to April 2019, consumer spending decreased by 21.6%.
These numbers are far worse than the 12.3% drop economists had predicted for sales in the first month of Q2.
In March, retail sales had already suffered an 8.3% nosedive from February; year-over-year sales were down 17.8%.
The only retailers to emerge from April unscathed were ecommerce outlets, whose sales jumped 8.4% between March and April as online shopping continues to be the preferred method of acquiring essential items during the ongoing health crisis.
Sectors that fared less badly, with retail spending dropping by less than 15% between March and April, were building materials and garden equipment (3.5%), motor vehicles and parts (12.4%), and food and beverage (13.1%).
The retailers that took the biggest hits in April compared to the previous month were clothing and accessories (78.8%), electronics and appliances (60.6%) and furniture and home furnishing stores (58.7%). Compared to April 2019, clothing and accessory sales were down 89.3%.
Already in jeopardy pre-pandemic, big-name retailers including Payless and Pier 1 Imports had already filed for bankruptcy while the economy was still growing. Now, in the midst of a massive economic slowdown, retailers that were in peril have even slimmer chances of surviving. Since April, Art Van Furniture, True Religion, J.Crew Group, John Varvatos, Neiman Marcus and Stage Stores have all filed for bankruptcy. Most recently, nutritional supplements retailer GNC warned it may have to file for Chapter 11 bankruptcy.