Jan. ’21 Retail Report: After Slow Start, Merchants Look to Spring Upswing

The Big Picture

With the holiday season, and holiday Covid surge, now behind us we can start to take a look at where we stand. Overall retail sales dipped 0.7% in December from the previous month, after a 1.4% drop in November, according to U.S. Commerce Department figures. When it came to apparel sales alone, there was a 19% decline over the holiday season from a year ago, according to MasterCard data.

This is not too surprising given the sloping sales curve we have seen since the start of the pandemic, and the fact that apparel has never been a strong holiday category. But there is some good news on the horizon, once we get through the first quarter doldrums.

The federal government is offering a new round of economic relief, savings rates are up, and the latest PPP loans are easier to apply for, and contain fewer restrictions. That has led some forecasters to predict a 5% increase in GDP this year, after a 3.5% annualized decline for 2020.

The Rough Month

While the future looks brighter, there’s no doubt that January was a rough month for some retailers. We saw a 35% to 40% drop from 2019 levels among many stores, as consumers shut their wallets after holiday spending. Continual delays at the U.S. Postal Service also created lingering frustration around e-commerce. What’s more, these delays are keeping some merchants from receiving new inventory.

While we don’t expect February to be much better, we are telling our merchants to hold on before making any more adjustments to their spring sales plans. Recent pandemic numbers are going down, which may mean fewer lockdowns, and vaccination rates are increasing, so the tide can turn.

Spring Plans

Right now, our spring plans, beginning in April, are forecast at around 20% off of normal (2019), which is a great improvement from the 30% to 35% average  drops we saw during fall of last year. In terms of trends, casual categories and activewear are still your best bets, as long as you can show customers new styles.

While we await the upturn, take a close look at your cash flow planning. Ideally, you want to be able to forecasts up to 12 months out so you have a realistic picture of where you will be over the next several months. This means combining your normal balance sheet with your open-to-buy plans. If you need help, we have a new cash flow planning tool we will we be happy to walk you through.

In the meantime, remember that there are pockets of growth, especially in the women’s wear business. If you have a men’s only store, have you re-balanced your departments yet? You could be leaving some money on the table.

Blacks’ Bottom Line

Now is the time to tighten up your plans and get a realistic view of your business through the end of 2021 with accurate cash flow planning. Remember, as always, Cash is King.


Note: We publish our monthly Blacks’ Retail Report on the blog one week after it goes out to our email list. Want to get it as soon as possible? Sign up here! It’s free and we never spam.