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Ekonomiskā vide - 2021 02 02
coronavirus | development forecasts | retail

Retail data: Is staggering growth expected?

Retail data: Is staggering growth expected? Photo: Caleb Lucas, Unsplash

The retail sector’s performance last year was growth. This spring, however, its indicators remain in negative territory. Right now, consumer demand is piling up, so retail growth is expected to be staggering this summer.

The retail sector’s fairly successful and rapid recovery has been hampered by renewed restrictions. In December, industry sales were already down 4.4%.

Especially non-food products are affected by the new requirements. So it could have been expected that sales in this segment declined by 13.1 %, while food retail sales grew by 3.4%..

The year ended with growth

Regardless of periods of decline, the industry managed to grow by 1.5% last year. This was mainly due to a 3.5% increase in food sales. Conversely, non-food sales fell by 1.9%.

The sector will continue to perform poorly in January and February, mainly due to restrictions imposed on non-food purchases. Food sales will continue to rise.

It is very likely that there will be a slight easing of the requirements in March, with the situation levelling off between segments. However, this will be driven by the epidemiological situation in the country.

Expect an explosion

At worst, the restrictions might last longer. The negative outcome has nothing to do with demand, but with the restrictions on the supply side. It is clear, then, that once the restrictions are lifted, we can expect a sharp increase in private consumption, as restrained consumption is unleashed.

As a result, we could see a staggering rise in retail sales over the summer months. This will certainly continue into the fall, when the need for new restrictions will resurface.

Consumption will be further supported by further wage growth and improved sentiment due to vaccination.

Dainis Gašpuitis
Economist at SEB

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