Retailer Growth in 2021?

Can the Retail industry have a bounce back year in 2021?  The answer is clear…it depends.  For example, in the US, National Retail Federation (NRF) CEO Matt Shay stated that, “…healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending.”  With that optimistic view, the NRF is forecasting that retail sales will grow between 6.5 percent and 8.2 percent in 2021-22. 

As retailers announce last year’s 4Q and full year results, there are not many surprises based on 2Q and 3Q performance. Fast moving consumer goods retailers and big-box general merchants like Walmart (+6.7%) and Target (+21%) had a good 2020-21, as shoppers focused on basic needs during lockdown. Fashion and specialty merchants tell a different tale. Fashion-oriented companies like Nordstrom (-31%) and Kohl’s (-20%) took big hits to their top lines. Specialty retailer Michaels achieved an almost-normal lift (+4%), while PetSmart achieved better than 5.5% revenue growth. 

So where does that leave retailers for the next year?  For those retailers that were successful last year, they are looking to increase their dominance, while those that have fallen behind are seeking to catch up. The NRF’s guidance is no doubt welcome news to everyone and that optimism was buoyed last week in the US by the March jobs report. 

The question remains however, will consumers return to buying as “normal”?  It has been well documented that the pandemic has altered the way consumers shop, where they shop and what they buy.  Let’s assume that consumers will return…will the retail community be ready?  We all remember the difficulties in finding toilet paper, disinfecting wipes and other products when the pandemic started.  Will we see similar runs on products and how do retailers and their suppliers plan? 

The crystal balls may be out, but there are things happening that are will be difficult at best to plan how it impacts.  One such thing is something that observers are calling “revenge shopping”. In its March 12^th digital edition, WWD described revenge shopping this way: “Revenge shopping, the phenomenon where consumers spend money on items and experiences that they have felt deprived of during the pandemic, may be on its way to the U.S. ‘with a vengeance’….”  It is hard to say how much this happens, but shopping is a social experience for many and if they now have the chance, watch out. 

The other end of the spectrum exists too.  There are still many “afraid” to get out and get back to whatever normal life is.  While there may be a rush to get out for some, there may be just as many still hunkered down and staying in place.  Regardless of which trend is going to be the biggest, retailers are in for a wild ride.