Yahoo Finance Retail Picture Bright in Mastercard’s March Report
What a difference a year makes.
U.S. retail sales, excluding automotive and gasoline, increased 26.3 percent in March compared to March 2020, when the pandemic first forced stores and other businesses across the country to lock down, according to Mastercard SpendingPulse.
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Online sales alone grew 56.8 percent last March compared to March 2020. And March 2021 apparel specialty sales rose 60.6 percent from March 2020, and 18.7 percent compared to March 2019, according to Mastercard.
Mastercard’s report cited stimulus payments and store reopenings as fueling March 2021 sales. However, Mastercard also indicated a big difference in percent gains during the first and second halves of last month. Sales in the first half of the month increased 1.6 percent from the first half of March 2020, when consumers were still shopping in stores. During the second half of March, retail sales rose 46.9 percent from the second half of March 2020 when stores were shutting down due to the pandemic.
Mastercard SpendingPulse findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and checks. MasterCard SpendingPulse issues monthly reports on retailing, thereby giving near real-time insights on consumer shopping patterns.
According to the report, which Mastercard issued Thursday, in March 2020, discretionary sectors such as apparel and jewelry experienced a dip in spend when people first started social distancing. That led to significantly elevated growth rates last month.
Essential sectors, such as grocery, faced the opposite situation as sales surged last year as consumers stocked up. Grocery store sales fell into negative growth territory last month compared to the strong growth in March 2020, but are back in the positive territory when compared to March 2019.
“What impresses me is that even as stores have begun reopening and brick-and-mortar starts to perform again, digital continues to be strong,” said Steve Sadove, Mastercard senior adviser and former chairman and chief executive officer of Saks Fifth Avenue.
“Categories such as hardware, home and grocery continue to be strong, but others are starting to come back,” Sadove observed. “Apparel is seeing big growth versus two years and you are starting to see people coming back to department stores. They’re getting back to levels of two years ago. It’s very encouraging for the more traditional brick-and-mortar department stores.”
Sadove added that with apparel, it’s no longer all about athleisure or casual styles. “You are starting to see [shopping for] newness and novelty and innovation. We’re entering an exciting period where people are looking for what’s new, and want experiences and want to go out.”
Spending is being fueled by the high rate of consumer savings in recent months and pent-up demand, Sadove indicated. According to Statista, in February 2021, the personal savings rate (the ratio of an individual’s savings to their disposable income) in the U.S. was 13.6 percent, down from 19.8 percent in January.
For retailers to succeed, particularly those selling nonessentials, “It’s going to be about how you differentiate and create experiences, show newness, and provide customer service,” said Sadove.
Among other Mastercard findings:
• March 2021 sales at department stores rose 114.3 percent from March 2020, and 0.1 percent compared to March 2019.
• Jewelry sales rose 106.1 percent in March compared to the year-ago month, and 29.7 percent compared to March 2019.
• March 2021 sales at groceries were down 20.4 percent from March 2020, and up 7.5 percent compared to March 2019.
• Electronics and appliance sales rose 2.7 percent in March compared to the year-ago month, and 10 percent compared to March 2019.
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