July Retail Sales Feel the Effects of the Delta Variant

Following months of recovery, retail sales stumbled in July.
Shopping mall

U.S. retail and food services sales for July 2021 fell 1.1% from the previous month. However, compared to a year ago, retail trade sales were up 13.3%, according to the latest figures from the Census Bureau.

The drop in sales coincides with a rise in the number of COVID-19 cases in the U.S. Summer travel pushed the Delta variant of the virus around the country, forcing several retailers to re-evaluate their mask-wearing requirements. Walmart recently brought back its mask-wearing requirements for employees in certain locations with high rates of COVID-19. 

While July sales were down, total sales for the May 2021 through July 2021 period were up 20.6% from the same period in 2020. Retail trade sales were down 1.5% for the month. The results did not convince the National Retail Federation (NRF) to change its expectations for the rest of 2021. NRF updated its forecast in June to reflect higher spending, with an expectation that retail sales will reach $4.44 trillion for the year. 

“July retail sales showed slight deceleration in spending, but nothing to derail our outlook for a record year,” said Matthew Shay, NRF president and CEO. “Though the Delta variant is presenting health challenges, while supply chain disruptions along with unfilled job openings are presenting business challenges, the consumer and broader economy continue to display steady strength aided by advanced tax credit payments and strong gains in the labor market and personal incomes.”

A number of categories saw huge gains in July sales compared to 2020, including clothing and clothing accessories, which were up 43.4% during the month.  

Nearly all categories reported declining sales in July from the previous month, but were still up compared to July 2020. Furniture and home furnishings sales were up 15.6% from last year, electronics and appliance store sales were up 23.6%, and sporting goods, hobby, musical instrument and book store sales were up 13.8% year over year.

“Despite this monthly dip, the economy has rebounded quite well and is more than just on the mend,” NRF Chief Economist Jack Kleinhenz said in a statement. “The consumer has continued to be resilient and recent price increases brought on by constraints in the supply chain have not dampened the robust demand seen during the past year. If retailers could find more inventory, they could sell it. Going forward, consumers are a bit fearful again as we approach another possible wave of COVID-19 infections, but they’ve learned to live with the virus and shopping continues. The Delta variant could impact local markets, especially where vaccination rates are low, but doesn’t appear likely to show up in the national data.”