Some Retailers Will Be Hurt By The Economic Recovery

Auto parts, accessories, and tire stores will also return to normal. Even though people were driving less, they had money to spend on their cars. Personal income actually rose in the recession because of government aid.

Still, more cash stayed in bank accounts because people could not go out to restaurants or on vacations. Some people had time to work on their own cars rather than have them serviced, but others used their extra cash to spruce up their rigs. After the economic recovery, sales in this sector will return to normal.

Grocery stores and liquor stores are two other sectors that will return to normal. When people could not eat out as much, they bought food to cook at home— or take-out from a grocery store. Take-out options are higher cost, higher profit margin products for stores. The same holds true of liquor stores, which had really strong gains during the pandemic. People will probably drink less in normal times, and they’ll do more of their drinking in bars and restaurants.

Also returning to normal will be drug stores. Some of their sales during lockdowns were probably goods that could not be purchased elsewhere. Cosmetics company Boscia announced in October that it was selling its products in Walgreens. As department stores closed, either from government orders or their own bankruptcies, drug stores attracted those shopping for cosmetics.

Warehouse clubs (such as Costco (COST) and Sam’s) will also return to normal. Their sales growth from February through October was 6%, whereas 3% would have been about normal. Some of their business in the spring came because as food merchants, they were able to stay open even as other stores were forced to close.

For example, in some areas electronics stores were closed, but one could buy a television at the warehouse club. However, these stores’ fall sales were strong despite most other stores being open. Perhaps some people got used to using the club stores, and others wanted to buy larger quantities to reduce the number of shopping trips. Look for a return to normal for this category.

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