June retail sales were strong for a second straight month, fueled by the reopening of economies across the country and the continuation of pent-up demand from lockdowns earlier in the year.
Overall retail sales rose by 7.5% in June, which followed May’s record 18.2% gain, the Commerce Department reported on Thursday. June’s gains were heavily weighted toward household items like clothing, furniture and electronics.
At the macro level, consumption is still going to be a significant drag on gross domestic product in the second quarter, but retailers are keeping their focus on the ever-changing market.
Across the entire ecosystem, retailers are hoping that the May and June results are the start of a sustained recovery and that the trend will continue. The question is how long will this last, and can it continue?
Source: Opportunity Insights
With coronavirus cases setting records every day in certain parts of the country, states have begun re-imposing restrictions on businesses like closing bars. But even more important than the potential re-imposition of these restrictions is consumer sentiment.
A good proxy for how consumers are feeling are restaurant bookings. As the nation’s economy began to reopen in the spring, restaurant bookings had a small, but noticeable, increase.
In recent weeks, though, that trend has slowed. The most likely scenario between now and the availability of a vaccine is that retail sales, and overall consumer spending, will likely see a bit of a rollercoaster ride.
Middle-market retailers that have had a small recovery in recent months should be right-sizing their business for the next time the rollercoaster dips.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.