NC retail numbers illustrate sharp decline, slow recovery

Compared to spring 2019, hotel and lodging plummeted 77%, clothing sales were down 58% and restaurants saw a 41% drop

In this July 12, 2020, file photo, a waiter wears a protective face mask and gloves while working at the il bolognese restaurant along Ocean Drive during the coronavirus pandemic, in Miami Beach, Fla. Unemployment remains painfully high in the U.S. even as economic activity is slowly picking up. That reality will be on display Thursday, July 16, 2020, when the U.S. government releases data on the number of laid off workers seeking unemployment benefits the week prior and retail sales in June. (AP Photo/Lynne Sladky, File)

RALEIGH — The 2020 lockdowns to contain the coronavirus pandemic sent shockwaves through both the national and local economies. The nation saw record declines in employment as well as the retail and hospitality sectors. It is unsurprising that these industries suffered as a result of stay at home mandates when lawmakers from coast to coast forced businesses, restaurants and hotels to close their doors to customers eager to open their wallets.

Last week the North Carolina Department of Commerce released new economic data showing that while the local economy fared better in April compared to national figures, statewide retail sales – a measure of purchases at stores, restaurants and online – declined 13% compared to a year ago. From March to April, the U.S. saw retail sales fall about 17%, while the month-to-month decline in our state was 11%.

April is significant because it was the only full month when North Carolina was mostly closed down due to the virus.  Gov. Roy Cooper first started limiting some business activities in mid to late March and didn’t start easing restrictions until late May. The local sales tax report also showed what people were – and were not – spending money on during this time period.

Locally the hardest-hit sector was hotels and lodging, where sales plummeted 77% compared with last year. Clothing and apparel sales were down 58%, and restaurants were down 41%. Groceries, lumber and building materials, and consumer merchandise sales were all up.

Andy Ellen, president and General Counsel at the North Carolina Retail Merchants Association says that no one no one really knew what the impact of COVID-19 would be on the retail sector, but that since people have been allowed to go back out into the community and shop he has seen the industry slowly start to recover. “There was a great deal of pent-up demand and I think as retailers continue to go the extra mile in providing a safe shopping experience for their customers and employees that customers are returning to stores.”

He says retailers have had to determine how to essentially “sell themselves” out of the situation they have found themselves in due to COVID-19. “Most importantly, retailers that have reached out to customers through social media and have implemented different sales channels like delivery or curb-side service have been successful.” Ellen also points out that retailers simply opening their doors to customers again does not guarantee consumer will come in. “Retailers have had to recognize that customers have to feel safe and communicate that to their valued customers,” he says.  

Ellen says his organization sees the state’s economy continuing to improve and are hopeful for a strong 4th quarter and holiday season. He said the NCRMA had been conducting webinars and hosting calls with state and local officials such as the Small Business Administration and the Employment Security Commission and acted as a clearinghouse for the slew of compliance information his members had been inundated with. “We want to make sure our members know how to follow local emergency orders and ensure their voices continue to be heard.”

Lynn Minges, president & CEO of the North Carolina Restaurant and Lodging Association has also been leading a series of webinars to keep her members up to date on the constantly changing state of things related to COVID-19. The group has started a restaurant workers’ relief fund to support the thousands of restaurant and bar employees who have either been furloughed or fired due to a loss in revenue.

Based on the fact that restaurants were forced to move to a takeout only model from March 17-May 22nd, Minges said the April economic figures were unsurprising. According to the association, prohibitions on dine-in service led to more than 300,000 restaurant employees being laid off or furloughed and nearly 70% of all restaurant locations closed or operating at very limited capacity. The lodging industry was also dealt a huge blow with most hotels operating at around 20% capacity during the state’s state at home orders. The NCRLA represents 20,000 businesses who employ 13% of the state’s workforce and generate more than $23.5 billion in sales annually.

Minges’s advice to people wanting to start a restaurant is that they will need to embrace a different business model – one that recognizes and prioritizes takeout and delivery as major sources of revenue. “One of the takeaways from the pandemic has been the importance of takeout and delivery service as sources of revenue,” she said. “I expect this will become the new model for restaurants moving forward and for quite some time.”

Ellen says his advice to people wanting to start a business would be to negotiate good rental rates and purchase rates with potential suppliers. “Ensure that you have two to three months of reserves prior to opening. Review the state, federal and local guidelines that your business is going to be required to follow – i.e. can you survive on 50% occupancy, and have you factored in additional costs for cleaning and cleaning supplies?”

Last week Raleigh Mayor Mary-Ann Baldwin said the local unemployment rate had risen to 11.5% since the pandemic began, up from 3.2% at the start of the year and that downtown business revenue was down 80%. She discussed steps the city was taking to address the issue such as creating a small business relief fund that has assisted 185 businesses and provided $1.7 million in aid so far. In addition, the city has relaxed outdoor dining rules and expanded outdoor seating in an effort to help restaurants make up some of their lost revenue.

Still experts warn the recent surge in coronavirus cases that has caused officials to halt or roll back plans to reopen certain indoor establishments could once again put the brakes on Americans’ ability to take advantage of retail and travel and leisure activities. In addition, economists and business owners alike recognize the bottom line is that consumers need to feel confident the virus is contained before economic activity can even begin to return to pre-pandemic levels.