People Who Think Retail Is Recovering Are Wrong

A new study by BDO USA shows that 18 retailers filed for bankruptcy in the first half of the year. There was hope that a decline in new COVID-19 cases and an “opening” of the economy would make a difference. Data shows that the case is otherwise. Retail traffic has not improved in the past two months at all.

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Data experts at Zenreach looked at traffic to stores by day this year as compared to 2019. There was indeed a recovery, but it flattened in early July. Since then, there has been no improvement. In recent days, numbers have actually dropped.

Zenreach made this observation:

On July 1st, traffic across all industries was at 51.9% of normal. By August 1st, 46.5% of normal. And on September 1st, 43.5% of normal. Early September saw a slight upward trend reaching 49%, but has now dropped to 43% as of September 27th.

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The data includes both brick-and-mortar retail and restaurants.

Restaurants have posted some improvement, due in part to outdoor dining. However, as the temperatures drop across the northern states, that opportunity largely will disappear this month. Any rise in COVID-19 infections will trigger states that have begun to allow indoor dining to close it down.

A look at the stock prices of several mainline retailers shows that investors remain skeptical that they can post any improvement at all. Macy’s Inc. (NYSE: M | M Price Prediction) stock is off 66% this year, compared to a rise of 4% for the S&P 500. Kohl’s Corp. (NYSE: KSS) shares are down 60%, and Nordstrom Inc. (NYSE: JWN) is off 71%.

If there is a recovery in retail, traffic to stores does not show it (with the exception of big-box retailers like Walmart and Target, which have posted reasonable recoveries).