2020 was a brutal year for retailers. In the course of those 12 months, dozens of popular names filed for bankruptcy, and many shuttered stores in the wake of the coronavirus pandemic.
But things changed in January in a very positive way. Last month, retail sales climbed to $568.2 billion per the U.S. Census Bureau, bringing a three-month streak of declines to an end. That 5.3% increase blew analysts' expectations out of the water -- they were projecting growth of about 1%.
Thank you, stimulus
Consumer spending rose across most sectors -- notably, electronic store sales were up about 15%, furniture store sales were up 12%, and department store sales climbed 23.5% on a monthly basis.
Why the surge? Analysts say it's a combination of people not having other things to spend money on and the $600 stimulus checks that went out to the public as part of December's $900 billion relief bill.
For almost a year, consumers' lives and normal spending patterns have been upended. Since many people aren't spending money to go out to eat, attend concerts, and travel, they have the flexibility to divert those funds to other purchases -- items they can use to make home life more comfortable while they're stuck staring at the same set of walls.
Meanwhile, the $600 stimulus payments that went out to the public also fueled an uptick in spending. While low-income households no doubt used those funds for essentials, like food and medications, moderate- and even higher-income households were eligible for stimulus cash as well.
Under the last round of payments, single tax-filers earning $75,000 or less and married couples earning $150,000 or less were entitled to a full stimulus payment, but because of phase-out rules and provisions for dependents, households with incomes above these thresholds managed to get their hands on stimulus cash, too. And it was most likely these well-off or comfortable households that went out and pumped that money back into the economy.
Given that there's another coronavirus relief bill in the works -- this time worth $1.9 trillion -- that features a third stimulus check for $1,400, retailers may be in for another windfall once that next round of cash hits Americans' bank accounts. And that could, in turn, stop a lot of retailers from going under.
All of this is, of course, very good news for malls and shopping centers, many of which are grappling with vacancies or vacancy-related concerns in light of the pandemic. If consumers spend their third stimulus at retailers, it could shore up enough companies' finances to stay afloat -- and stay on as tenants. In fact, a 23.5% uptick in department store sales is particularly good news, seeing as how malls rely on these stores to serve as anchor tenants.
The Millionacres bottom line
While relief legislation that allows for those $1,400 stimulus payments has not yet been signed into law, House Speaker Nancy Pelosi recently said she's confident that will happen by mid-March, if not sooner. If stimulus checks then go out in short order, we could see an additional uptick in retail sales this spring, at which point mall REIT (real estate investment trust) investors will be able to breathe a huge sigh of relief.