The U.S. Census Bureau retail report showed a sales improvement of 9.8% (seasonally adjusted) in March compared to February for the retail trade and food services industries. Favorable categories were apparel and accessories, up 18.3% as anticipated due to warmer weather, a lift on COVID shopping restrictions and the Easter holiday. Nonstore sales improved 6% with the category having the highest sales in March and exceeding December holiday numbers. Department stores were up 13% while grocery stores remained relatively flat. Home Improvement was up 12% and has continued to deliver strong performance throughout the pandemic leading up to the March selling period. The growth for Home Improvement should continue into April and May as these months have traditionally been strong revenue months for this category.
Ethan Chernofsky, VP of Marketing, Placer.ai, stated, “Home Depot HD and Lowe’s were two of the pandemic’s strongest performers benefitting from essential retail status in the early shutdowns last year and it appears that this trend is not slowing down. Consistent and significant ongoing growth is shown in weekly visits compared to 2020 and the last ‘normal’ period in 2019.”
According to Placer.ai, continued traffic to both Home Depot and Lowes remained positive since January as compared to last year. When looking at the seasonal trend from 2019, the outlook is positive. Retailers typically compare current year to previous year as a means of measuring performance, however, for 2021 many companies will be using 2019 as the comparative year since it reflects normal sales trends, as opposed to the pandemic year of 2020. Both Home Depot and Lowes report first quarter sales in May 2021.
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Chernofsky said, “The seasonal traffic trend is especially promising as it indicates that the sector’s normal spring peak could drive yet another surge for these brands.” Chernofsky discussed how Home Depot, in particular, could be in for even more significant growth as visits to the chain were impacted more severely than Lowe’s earlier in the pandemic. Chernofsky stated, “Home Depot is a high-performing brand, in a high-performing sector poised for even more exceptional growth.”
Although retail sales show positive growth amid stronger shopping behavior, the escalated demand could lead to higher prices and inflationary pressures. The consumer price index rose 2.6% in March (partly due to rising gasoline prices) compared to last year which was the highest gain since 2018. Federal Reserve Chairman Jerome Powell stated that while a temporary surge in inflation is expected, the price index increase should settle down to 2.1% by 2023.