While stores’ foot traffic is still down significantly, the decline has eased. Foot traffic tumbled 97% in April compared to last year, according to Cowen. It was down 69% in the first week of June.
The encouraging developments have company executives and retail analysts asking a question: How long will the good news last?
Still, he acknowledged it’s too soon to say consumers are fully ready to return to physical stores. “It’s difficult to know how long this pent-up demand will last,” he said.
The problem is that consumers could become less willing to make discretionary purchases on things like clothing if money tightens up.
Those benefits are slated to expire at the end of July. Retailers’ recoveries may stall without additional stimulus to consumers from the federal government, warned Neil Saunders, managing director at GlobalData Retail.
“If there is a second wave of the virus, this progress may be undone,” he added.
‘A very fluid environment’
Retailers have been cautious in their language given the uncertainty. Kohl’s CEO Michelle Gass said Tuesday that the department store chain’s more than 1,000 reopened locations are at 75% of their pre-pandemic sales.
Gass said she was “encouraged with the signs” but added that it was “still a very fluid environment.”
In one positive sign, some retailers have said customers are coming back faster than expected.
For instance, Macy’s had expected sales at reopened stores to return to about 20% of pre-pandemic sales levels, but CEO Jeff Gennette said Tuesday that reopened stores are bringing in about half the sales they normally tally.
“Our reopened stores are performing better than anticipated,” Gennette said. Around 500 Macy’s stores that began shutting down in March have since reopened.
Teen clothing stores and discount chains are also reporting improvement.
Discount stores, in particular, are benefiting from consumers hunting for bargains.
TJX CEO Ernie Herrman said for the 1,100 stores that were open on May 21 for at least a week, overall sales have been above last year’s level. Due to the large influx of customers on weekends, TJ Maxx decided to implement store reopenings on Mondays instead of its original plan of reopening stores on Saturdays.
“The recovery is fragile,” GlobalData’s Saunders said. “There are some signs that this is a temporary blip that starts to fade after stores have been open for a few weeks. In other words, it’s latent demand from the lockdown period.”