MARCO ISLAND, FLA. — With the onslaught of government payouts and unprecedented fiscal and monetary stimulus over the past 18 months, consumer spending remains strong, even above pre-pandemic levels, while personal savings rates are at or near record levels.
That’s the good news from David French, senior vice president, government relations, National Retail Federation (NRF), who spoke at SNAC International’s Executive Leadership Forum, held Oct. 17-19 in Marco Island, Fla.
“The American consumer is in a really good place,” he said. “Household net worth is at an all-time high.”
Mr. French added that the NRF foresees strong growth and continued momentum for the broader retail industry through 2021. Even apparel, furniture and other retail sectors that got hit hardest by the initial lockdowns during the early stages of the coronavirus (COVID-19) pandemic in 2020 have rebounded as retail sales grew at the highest rate in 20 years.
Retailers have benefitted from consumer spending, which has grown each month, year over year, since May 2020.
“If the story of 2020 was about excess stimulus,” he said, “the story of 2021 is about more excess stimulus plus the rollout of the [COVID-19] vaccine.”
The downside, however, is that retailers, snack manufacturers and almost every other company face several challenges.
“It’s fair to say that the road to recovery is not without its hurdles,” Mr. French said.
Currently, he noted, there are about 1.1 million retail job openings, even before the peak holiday shopping season approaches.
“We’re growing so fast that it’s hurting,” he said.
Supply chain issues, he added, are another global concern that’s not going to be resolved anytime soon.
In fact, the entire chain seems to be affected by issues ranging from a lack of container availability and ocean carrier capacity to a lack of warehousing and a shortage of truck drivers to get goods to retail stores or delivered to consumers.
“Supply chain disruption is the other big factor in how much growth is killing us,” he said. “Worldwide supply chain disruptions due to the pandemic have slowed imports in the US and increased costs, which is a key factor in underlying inflation.”
While the United States has the lowest vaccination rate of G-7 countries, which is a group of seven of the world's most advanced economic nations, the US rate continues to rise, and that’s good news for retailers.
“The continued uptick in the vaccination rate will strengthen consumers’ ability to return to normal shopping behaviors,” Mr. French said.
He pointed out those shopping behaviors include online purchases, which peaked last year, but have leveled off over the past few months while remaining at significantly higher levels than before the pandemic.
Mr. French said that studies from Euromonitor have shown that consumers, even older ones, have become increasing comfortable with online shopping primarily because of the convenience that it offers. In fact, half of consumers say the changes they made during the pandemic have become habits and will continue.
“Consumer patterns are returning to what we call a ‘new normal,’ ” Mr. French observed. “It’s naïve to assume that consumers’ behaviors will just rewind to where they were in 2019.”