The disruption caused by the ongoing coronavirus pandemic is expected to result in a 5.1% fall in U.S. retail spending in 2020, more than double the decline seen during 2009’s financial crisis, with fashion retailers set to be among the biggest victims.
A new study from GlobalData predicts that U.S. retail spending will see one of the steepest slumps of any country in 2020, experiencing a decrease of $200 billion versus 2019. Only 10 other major markets are forecast to see deeper declines.
Different sectors will have markedly different fates, though, with food, grocery, and health retailers seeing sales increase as consumers move to stockpile essentials, while non-essential retailers will suffer the most drastic declines due to a drop-off in consumer confidence.
Fashion retail, in particular, is expected to feel the pinch. As GlobalData retail analyst Emily Salter explains, “consumers have no events or holidays to purchase new clothes for, and growth in the demand for loungewear cannot match this.”
Restrictions are now lifting in some U.S. states, but GlobalData expects that many stores will remain closed for the time being and predicts footfall to be down significantly through the end of May. While spending on non-food items is expected to show signs of recovery in June, normal spending patterns will most likely not resume before October.
Furthermore, Salter pointed out that “among many consumers, this will not be the case because of the high unemployment rate caused by the economic restrictions currently in place.”
Overall, U.S. retail spending is expected to fare better than that of nations such as Spain, France, and Italy, because the country has not implemented a full lockdown. However, it is predicted to perform worse than the UK, Germany, and Canada, due to the vast number of job losses caused by Covid-19.