Walmart, Target, Amazon Lowe’s and Home Depot Surprise Wall Street

Photographer: Jeenah Moon / Bloomberg

The American consumer proves farther than predicted.

Conventional wisdom, which initially assumed that many American shoppers would save their wages and incentive funds until the pandemic subsided, has persisted. The largest U.S. retailers all reported sales in the last quarter that expectations blew.

From Wall Street to the retailers themselves to the manufacturers supplying them, it turned out that no one was ready for just how fierce demand would be of a consumer base going within stuts with nowhere to go.

Room for home improvement Home Depot Inc. en Lowe’s Cos., Saves everything Walmart Inc. and Target Corp., and of course online behemoth Amazon.com Inc. each beat the sales forecasts of analysts in the summer quarter – and with billions of dollars apiece. Companies that were quick to shut down more online outlets than already have apps installed for sidewalk pickup have done it particularly well, plus those who meet a dying American shopper who wants to spend.

The “fatal mistake” of economists was that people would always keep their portfolios closed in difficult times, leading to calculations on consumer demand, said Doug Stephens, founder of Retail Prophet.

The recent space of robust retail services has shown the power of consumer sensitivity and adaptability. They also reinforce the extreme unpredictability of pandemic times.

Going forward, this past quarter casts doubt on how seriously anyone who claims to have a lecture on America’s shopping habits takes seriously, especially since Congress remains stalemate over additional incentives and millions still without work.

Big six

Craig Johnson, chairman of Customer Growth Partners, says the “big six” retailers are seeing record growth – Walmart, Amazon, Home Depot, Target, Lowe’s and Costco Wholesale Corp., which have not yet reported – all share some common traits. They have consistent growth of traffic, increasing store productivity, improved online platforms, a mix of discretionary and non-discretionary items and a clear understanding of the needs and preferences of their customers.

“On a dollar basis, households are saving $ 3.4 trillion, up from $ 2.2 trillion from last June, indicating that consumers still have a lot of dry powder waiting to be spent,” he said in an email. “Retail sales are also supported by the steep decline in travel, entertainment and restaurant spending.”

Lowe Chief Executive Officer Marvin Ellison has certainly seen that trend. When his company reported sales of the same store in the US at a blistering rate of 35.1%, he says he sees a behavioral change in consumers.

‘It’s a shift away from holidays, it’s a shift away from eating. It is a shift away from buying clothes. It is those dollars that you may have invested in things that you are now spending on your home and in some cases out of necessity such as trying to create a more functional environment, ”he said in an interview.

The government’s retail sales data underscore this adjustment. Sales at retailers, building materials companies and auto dealers account for larger shares of total retail purchases than they did in February, before the pandemic, while restaurants and clothing retailers represent less.

Ellison even changes how he views his own home space. His daughter is an incoming college freshman, whose first few weeks of high school will consist of distance learning, so Ellison had to set up a subject classroom so she could work productively.

“Do we also see discretionary spending? Wis. We also see people getting new furniture, upgrading appliances and we see other things like new kitchens, new bathrooms, ”he said. ‘What surprised everyone was that we all spent more time at home than we have ever had in our lives. We are just looking for more things to do to make our homes functional. ”

Another potential sign that consumer spending went better than most feared: Even small businesses have been surprisingly resilient so far, and avoids the rise in permanent closures that many expected at the start of the Covid-19 crisis.

Industry losers

Those retailers that have not gone so well are the ones that are closely affiliated with the American mall, especially department stores and retailers focused on clothing. TJX Cos., The owner of the TJ Maxx and Marshalls chains, fell the most in more than four months on Wednesday after predicting that sales at open stores in the current quarter will drop as much as 20%, while Kohl’s Corp. declined on Tuesday as it became clear that the company was struggling to get sales back because shoppers were staying at home or flocking to e-commerce.