Economists' Outlook

Housing stats and analysis from NAR's research experts.

Weekly Retail Update: January 5, 2021

As 2020 closed, it concluded a year that saw a pandemic end the longest U.S. economic expansion in history and sent other economies into an economic downturn. While some challenging aspects of 2020's economic environment will most likely continue in 2021, new developments in the recovery of economic growth, vaccines, more clarity with respect to the U.S. presidential election, and the fiscal stimulus package provides for more optimism as we begin this new year.

While real estate typically trails the overall economy, retail properties have been considerably impacted as a result of the pandemic and will most likely still need time to steady. Retailers are currently closing out the fourth retail quarter – including 2020's holiday season, which was significantly influenced by pandemic-driven consumer spending habits.

November's retail trade sales decline of 0.8% from October came as no surprise as online sales surged in October as retailers pulled the holiday shopping season forward in an effort to encourage consumers to shop online and avoid potential safety hazards from physical retail locations.

While many emphasize the downtick in November sales, we focus on the growth with respect to year-ago levels, and the November data provides insight into a solid holiday shopping season where retail trade sales were up 7.1% year-over-year for November and retail sales year-to-date (January – November) were up 3.0% from 2019. With the pending release of the U.S. Census Bureau December 2020 advance retail sales next week, should December retail sales see a decrease, we can still anticipate sizable year-over-year retail sales growth overall as consumers continue to adapt to shopping online, ordering deliveries online, and click-and-collect.

With the new round of fiscal stimulus including economic impact payments, we anticipate an increase in retail sales spending that will aid in extending some of 2020's sales momentum into the new year. Unfortunately, not every retailer will have an opportunity to see this momentum as the retail landscape will be comprised of retailers with solid financials and those who have shown that they can and have adapted to the economic environment.

January is generally the month in which retailers announce store closures as they plan brick-and-mortar retail for the new year, and for 2021, there are likely to be significant bankruptcy filings and/or store closure announcements from U.S. clothing and clothing accessory stores, as retail sales were down 16.1% year-over-year in November 2020 and down 27% year-over-year from January through November 2020. Although some retailers, both larger retailers and mom-and-pop stores, will no longer be around, we are optimistic that a more well-conditioned and prepared retail industry will prosper with new store offerings and utilize emerging technologies that will invigorate the industry.