Commentary

What Retail Sales Trends Mean For Publishers

News coverage about the U.S. government's retail sales report-- a key indicator of consumer health -- was filled with perilous descriptions about the sorry state of the economy during the COVID-19 pandemic. Yet nothing in the report was surprising amid lockdowns on businesses that provide a significant source of advertising revenue to publishers.

Anyone who has ventured out to go to work, get some fresh air or buy groceries knows only a handful of stores are open. Many restaurants are limited to takeout and delivery service. About 95% of Americans are living under some form of lockdown.

The retail sales data reflect those closures, showing an 8.7% drop to $483.1 billion in March from the prior month, a record decline in data going back to 1992, according to the Department of Commerce. Economists say the April numbers will be even worse when they're published next month.

Shopping activity has been focused on ecommerce sites and retailers deemed as "essential," including grocery stores, pharmacies and mass merchants that offer a mix of necessities.

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Grocery stores saw a record 29% surge in sales as Americans filled their pantries with canned goods and other non-perishables to prepare for isolation, while hardware stores reported a 7.6% gain as consumers shopped for cleaning supplies and materials for home projects.

Nonstore retailers -- a term to describe direct marketers and online stores -- boosted sales by 9.7%, an increase that may be hard to maintain as consumers become more cautious about their spending while confronting job losses or pay cuts.

Store closures had the biggest effect on clothing retailers, whose sales plunged 51% in March from the prior month, while furniture and home furnishing stores saw a 25% decline. Sales at auto-parts stores sank 24%, while sporting goods, hobby, musical instrument and bookstores experienced a 23% drop.

The lockdowns even dampened demand at gas stations, whose sales fell by 18%. While gas stations are considered essential businesses that can remain open, fewer people are going anywhere outside their homes.

These figures are obviously discouraging for publishers whose advertisers are in these industries. Unfortunately, many print and digital media outlets have been forced to slash costs, cut jobs, freeze hiring and suspend publishing to stem the bleeding.

At the same time, publishers need to develop strategies to work with advertisers on campaigns that highlight how they're helping people to get through the crisis, as they've done in past recessions. It's not too early to be thinking about what the recovery is going to look like as policymakers and companies devise strategies to get people back to work.

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