We are entering a period of recovery – and my view of what is ahead reflects both confidence and fear. As a result, this report is written with a caution – the outlook is subject to change caused by government action and shifting consumer sentiment. Here is what I see unfolding:
For the immediate future:
Results will show improvements. It is a year since the pandemic caused by COVID-19 started to take its heavy toll on our lives. I believe we will now see a gradual recovery and retail sales will increase substantially; comparisons with last year are easy since many stores were closed during parts of the pandemic last year. Now, states are relaxing restrictions. Despite the fact that most shoppers are still averse to “go shopping”, it is likely they will go out and spend some money. Certainly, the government hopes they will do that in order to jump-start the economy. Those easy comparisons will be true for the next two quarters.
What is shaping the immediate future: The government’s $1.9 trillion relief package – with $1,400 checks for most working Americans – is an incentive for people to start spending again, whether to buy food, eat and maybe spend for some necessities. It is a fact that some people are putting this money into stocks and may be speculating, but for most Americans this is a relief package of unprecedented impact. It is an incentive for people to spend.
The bottom line for retail: People have some more money and sales comparisons will be easy when compared with last year. Most retailers will report substantial increases in sales. I expect a burst of spending to drive an increase of +20% over last year and almost equal 2019 levels, the last pre-pandemic period.
Fall and Beyond:
Fall will be more challenging overall. On the positive side of things, as we sail into the Fall season, it is likely that there will be another relief package by the government focusing on global warming. I personally hope it will also include work programs that would fix roads, bridges, and tunnels because the whole infrastructure of roads needs care so badly and it would employ a large work-force. The improvements are needed and so are the jobs.
All this suggests that some difficult times are ahead. The high unemployment rate – pegged currently at over 6% – hints at the many men and women who are in search of employment. For instance, I estimate that JCPenney
The counterpoint is new openings. I hope new store openings will help change the mood and the outlook for the economy. So far, 3,188 store units have been announced to be opened, this number greatly exceeds the 2,545 units that have already closed in 2021. The openings are encouraging. The schedule so far includes: Aldi will add 100 stores, American Eagle Outfitters
Taxes will be raised and present a mixed blessing. The first hint of higher taxes was voiced by government officials, and I believe that we will see Federal and State taxes increase. It will probably affect people with higher incomes and corporations. While no one likes higher taxes, the government is in dire need of some reparation to deal with debt and infrastructure issues.
The bottom line for retail: The initial rebound…
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