PCDC Watches for Local Opportunity Amid Worldwide Pandemic
Friday, April 24, 2020
While the COVID-19 pandemic has forced some businesses to close or experience slow foot traffic, it has created overtime work and extra sales for others.
The Phelps County Development Corporation staff has been closely following the latest trends in how the virus has impacted local, state and national economic activity. The PCDC staff is also closely monitoring how the local economy could find opportunities in this pandemic.
PCDC partners with nationwide data, marketing and recruitment firm Retail Strategies who recently provided a broad overview of how COVID-19 is impacting different sectors of the retail market.
According to Retail Strategies, the following businesses categories nationwide have experienced increased sales due to the COVID-19 pandemic:
- Grocery stores nationally experienced sales at around 30-35 percent higher than average in March due to panic buying at the beginning of COVID19. Grocery traffic is down 63 percent while the average cart price is up. People are consolidating their grocery trips into fewer but much larger ticket trips.
- General merchandise stores have been the real winner. Nationally, Walmart, CVS, Walgreens, Target, Dollar Tree, Dollar General and Amazon are in rapid hiring mode to keep up with demand. These retailers are “doubling down” on convenience, and some are offering curbside pickup.
- Home and garden stores have also seen large spikes in sales. This is partially attributed to normal spring sales, but with consumers being confined to their homes, they have extra time and incentive to spruce up their homes.
- Pet supply store sales surged on pace with the grocery run in March. Dog food sales were up 159 percent.
PCDC Executive Director Ron Tillery said the information provided in the Retail Strategies report is similar to what he suspected was happening locally.
“There was a big bump due to consumer demand and hoarding,” Tillery said. “Locally, the numbers have been confirmed by store owners who say they reached more than 150 percent of typical store sales and that demand has settled over the last two weeks at 125 percent of typical.”
Tillery said strong sales have also been reported locally at Dollar General, Family Dollar and Orscheln Farm and Home.
“So far, retail sales have been tracking slightly ahead of what was projected in the market,” Tillery said. “The real story won't be seen until June and July when retail sales numbers for February, March and April are reported.”
On the flipside, Retail Strategies reports major downward trends in the following businesses nationally:
- Restaurants that have been able to maintain delivery and to-go orders are still able to do 40-50 percent of their normal sales. Those sales along with government loans and grants will hopefully keep a majority of restaurants afloat. Losses may occur in this sector but mostly from brands that were already teetering, and the pandemic will just speed up the inevitable. As an industry, restaurant sales were down by about 70 percent from a year ago.
- Clothing and apparel businesses have nationally experienced a 60 percent drop in sales as most people canceled or postponed vacation plans, weddings and other social events.
- Recreational and fitness goods have taken a large but temporary dip. In March, sales dipped for golf clubs (-33 percent), coolers (-30 percent), party supplies (-55 percent), cameras (-65 percent), luggage (-77 percent), drones (-50 percent), gym bags (-57 percent). The demand for these items is expected to surge once the pandemic is over.
- The service industry will be one of the hardest-hit sectors with no real chance for rebound sales once this pandemic is over. Hair salons, massage parlors, dry cleaners, etc., will have lost revenue opportunities that cannot be replaced by a spending swell once life returns to normal.
Tillery said it’s difficult to predict what will happen in the near future, but some positive changes could be on the way for the local economy.
“If the economy begins to open in May, I can envision a very strong back-to-school rush and a strong home improvement season,” Tillery said. “There will be pent-up demand to shop locally and to some extent cabin fever will drive spending. However, there may be some caution regarding major purchases of durable goods since uncertainty about the economy will linger for a while.”
Tillery said vacation and discretionary travel may take more time to gain traction, which is exactly what Tillery and PCDC staff heard from a recent economy update from Nebraska Public Power District.
NPPD predicted that the pandemic will hit the tourism and hospitality business the hardest and longest because vacation travel won’t likely return to normal until after the end of 2020. That will also impact the aviation and airline industry.
However, NPPD said due to supply stream challenges in China, there may be strategic moves to diversify the supply chain.
“Rural Nebraska is well-positioned to take advantage of supply-chain opportunities related to Asia-based manufacturers seeking a domestic location that offers a stable, lower-cost alternative,” Tillery said. “We intend to aggressively market Phelps County as that alternative.”
For more resources or statistics about the local economy and future opportunities, please contact Ron at Ron@PhelpsCountyNE.com. Retail Strategies can provide specific data reports for any Phelps County business owner or future entrepreneur.