The onslaught of winter storms, snow and ice cooled retail spending in February, resulting in a 3% decline from January, analysts say.
“Bad weather throughout much of the country showed that brick-and-mortar sales still have a significant effect on overall retail sales,” said Ted Rossman, senior industry analyst at Bankrate.com.
Retail sales, according to a report released Tuesday by the Census Bureau, estimates monthly retail and food services sales for February totaled $561.7 billion—down 3% from the revised total of $579.1 billion in January and up 6.3% from February 2020. Total sales from December through February were up 6% from the same period a year ago.
The Census Bureau, part of the Commerce Department, conducts monthly retail surveys to estimate retail sales. The surveys mail questionnaires to about 5,500 retail and food service firms. The survey estimates sales for every category, including retail and food, motor vehicles, furniture, electronics, building materials, health and personal care, gasoline and sporting goods.
Inclement weather historically does not bode well for retail, so the dip in retail sales should come as no surprise, analysts say.
The difference with this year’s record-breaking winter was its expansive reach—snow and ice impacted areas of the country, like the south and southwest, not used to experiencing frigid conditions.
“There was unexpected cold weather in certain markets like Texas, which was offline for weeks,” said Jonathan Silver, founder and chief executive officer of Affinity Solutions, a global insights firm which measures consumer purchasing habits.
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Bad weather was not the only factor contributing to the downward shift in spending, analysts say.
Non-store retailers, such as e-commerce retailers like Amazon, fell 5.4% in February, Rossman noted.
“Department stores, clothing retailers, hobby shops and bars and restaurants were strong in January but fell in February,” he said. “A month after all sectors rose, only gas stations increased their sales from January to February. Food and beverage stores broke even.”
Traditionally, January and February are considered “holiday spending hangover” months, Silver said.
“There was a lift in spend on home repair, construction and outdoor hobbies, which was offset by the cold and inclement weather,” Silver said.
Retail trade sales were down 3.1% from January, and tracked 9.5% above the same month last year. In addition, non-store retailers were up 25.9% from February last year, while food services and drinking places were down 17% from last year.
“While February’s retail sales results came in slightly below expectations, there’s still reason for optimism,” said Tom McGee, president and chief executive officer of the International Council of Shopping Centers, citing the passing of the American Rescue Plan Act, the $1.9 trillion stimulus bill that includes the third round of stimulus payments to millions of Americans in the amount of $1400.
It will put more money in consumers’ pockets, provide relief to small businesses in need, and further bolster the vaccine distribution efforts, McGee said.
“Only one month removed from extremely strong January retail sales results, we expect a rebound in the coming months as containment of the virus improves,” he said. “Additionally, our recent survey of industry leaders found that over the next year, retailers and commercial real estate executives expect to see pre-pandemic sales and traffic levels as health and safety concerns subside and consumers act on pent-up demand.”
The retail forecasts may provide insight into monthly retail spending, but it’s important to look at the big picture, analysts like Silver say.
“Everyone is looking at month-over-month declines due to the immediate focus on the [Covid-19] environment,” Silver said. “It’s important, though, not to overlook that the numbers are up year-over-year for February by over 6%. This demonstrates a resilience and underlying positive trend line in our consumer economy.”
Others say the statistics and wavering retail spending are signs of continued fragility in the economy.
“I believe March and beyond will be much stronger, but without massive government stimulus,” Rossman said. “these figures would be a lot worse. Consumer spending is still being propped up artificially.”