Driven by savings and stimulus funds, Americans spent $100 billion more each month in March and April this year than they did two years ago. JL
Micah Maidenberg reports in the Wall Street Journal:
Total U.S. spending at stores, restaurants and online jumped 10.7% in March from February 2021 and stayed at that level in April. That means Americans spent more than $100 billion extra each month compared with March and April 2019, when the U.S. economy was booming and unemployment was near historic lows. Big retail chains are rushing to have goods to sell in their stores amid surging demand from consumers. As vaccines roll out, households get stimulus funds and restrictions are lifted, people are shopping in stores again.Big retail chains such as Dick’s Sporting Goods Inc. DKS -1.04% and Best Buy Co. BBY -0.09% say they are rushing to have enough goods to sell in their stores this year amid surging demand from American consumers for products from fitness equipment to televisions.
The situation is a sharp turn from the depths of the Covid-19 pandemic a year ago, when many retail executives worried aloud about whether shoppers would ever return to their stores. Companies shifted to e-commerce and added curbside services. But this spring, as vaccines roll out, households get stimulus funds and restrictions are lifted, people are shopping in stores again.
The spending is adding to inventory challenges that surfaced last year when shoppers hurried to buy items such as toilet paper and bikes. Now, purchasing teams are dealing with a range of in-demand items along with pandemic-fueled strain on supply chains. They risk potentially losing out on sales as consumers have historic levels of money to spend.
“It’s hit almost every aspect of the business, so we’re chasing all the time. We’re chasing everything. But we’ve gotten really good at it,” Lauren Hobart, chief executive of Dick’s Sporting Goods, said this week about finding some products. Executives have pointed to supply constraints for certain products, and in March said the company had been pushing to get fitness items, kayaks, golf equipment and athletic apparel.
In-store sales, year-over-year growth
–30%
30%
2021
Feb.
March
April
May
Apparel and accessories
Autos
Department stores
Electronics
Finance
Fitness
General merchandise
Grocers
Health and beauty
Healthcare and insurance
Hobbies and toys
Home
Home entertainment
Occasion and gifts
Pets
Restaurants
Specialty
Specialty food and beverage
Sporting goods
Telecommunication
Travel and transportation
Note: Data is 4-weeks trailing, derived from a panel of over 6.5 million U.S. consumers, weekly data calculated from Thursday - Wednesday.
Siemond Chan/THE WALL STREET JOURNALSource: Earnest Research
Dick’s reported sales in the quarter ended May 1 more than doubled from a year ago when stores temporarily closed, and jumped 52% from the same period in 2019. Ms. Hobart said team sports returned with a vengeance while golf, fitness and outdoor products also had strong demand.
Best Buy Chief Executive Corie Barry said Thursday that unprecedented demand and production disruptions have made it harder to get items such as large appliances and televisions. Still, comparable sales shot up 37% during the company’s quarter that ended earlier this month as it worked to navigate supply-chain challenges and collaborated with vendors to bring in inventory.
Assuming demand remains up, the company expects “some level of inventory constraints likely in pockets throughout the rest of the year,” Ms. Barry said.
At discounter Dollar General Corp. DG -0.08% , out-of-stock levels for some products were higher than the company wants to see, Chief Financial Officer John Garratt said. Burlington Stores Inc. BURL -0.98% executives said the apparel chain has seen delays tied to imported goods it sells.
Total U.S. spending at stores, restaurants and online jumped 10.7% to about $620 billion in March from February 2021 and stayed at that level in April, according to Commerce Department data. That means Americans spent more than $100 billion extra each month compared with March and April 2019, when the U.S. economy was booming and unemployment was near historic lows.
Supply chains, however, have been strained by the pandemic as well as shortages of shipping containers and delays at some California ports that handle cargo from Asia. Freight costs have been rising, and trucking companies are trying to recruit more drivers to meet the heightened demand.
“We’re monitoring things like delays at the ports and other factors in the supply chain,” John Furner, Walmart Inc.’s U.S. chief executive, said earlier this month. He cited adult bicycles and some consumer electronics as product areas where the retailer is still pushing to get better stocked up.
“Companies have called out varying levels of inventory constraints, with almost all companies we have spoken to alluding to a supply-demand mismatch,” said Simeon Siegel, a retail analyst with BMO Capital Markets.
That has resulted in fewer discounts and leaner inventory at the companies Mr. Siegel tracks. There were 25% fewer items on sale in the first quarter of this year, compared with the same period a year ago, while inventory was on average 4% lower than a year ago for the companies he tracks that had reported earnings as of last week.
Some chains say they are buying less on purpose.
“One of the biggest things we learned from Covid was the balance between supply and demand and that you can have a strong, profitable business with less inventory,” Fran Horowitz, chief executive of Abercrombie & Fitch Co. , said Wednesday, after the company reported that net sales jumped 61% from a year ago. “Chasing goods has become a part of our business.”
American Eagle Outfitters Inc. AEO -2.03% has seen longer transit times to get inbound goods, but believes it will see clean transportation flows for the summer and back-to-school shopping seasons, operations chief Michael Rempell said Wednesday.
“We’re not anticipating delays…to be an issue for us,” he said.
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