Total U.S. retail sales (which include auto and fuel) could decline by more than 10% in 2020, according to eMarketer’s latest forecast. However, e-commerce is the only bright spot that is expected to jump 18% this year.
Also, except for food and beverage, and health and beauty, all categories are expected to see a drop this year. The coronavirus pandemic has been hurting all industries with businesses and stores remaining closed for more than two months. However, as more people are staying indoors on fears of the coronavirus spreading, online retail sales have been gaining popularity.
E-commerce to Grow Despite Drop in Retail Sales
According to eMarketer’s latest report, total retail sales will drop by 10.5% this year, sharper than the 8.2% drop in 2009. In 2020, total retail sales will drop to $4.894 trillion, a level not seen since 2016. A rebound is not likely to happen until 2022.
However, e-commerce is the only bright spot that is expected to jump 18% this year, as more people will be relying on Amazon.com, Inc. AMZN and other online retailers for necessities. E-commerce sales are expected to reach $709.78 billion this year, representing 14.5% of total U.S. retail sales in 2020.
Food & Beverage, Health & Beauty to Drive Online Sales
Also, almost all categories are likely to witness a drop in sales except for food and beverage, and health and beauty. Total food and beverage sales are expected to jump 12.5% this year to $1.110 trillion, while health and beauty sales will likely grow 6.9% to $556.30 billion. The top-growing ecommerce categories should be food and beverage at 58.5%, and health, personal care and beauty at 32.4%, as an increasing number of people turn to online ordering for household essentials.
Retail Sales Hit Hard
U.S. retail sales have already been hit hard by the coronavirus-led shutdown. According to the U.S. Census Bureau, overall retail and food service sales declined about 22% year over year in April. However, e-commerce has been a savior. According to Adobe’s Digital Economy Index, U.S. e-commerce jumped 49% in April compared to the baseline period in early March before shelter-in-place restrictions went into effect.
The growth was led by grocery sales. U.S. grocery sales increased 14.5% in April when compared with the same month in 2019. According to Adobe’s Digital Economy Index, online grocery sales jumped 110% between March and April. Also, electronic sales were up 58% and book also doubled.
The economy has started reopening but the government is still struggling to contain the pandemic. Safety measures, like strict social distancing guidelines will exist for at least a few more months now. Hence, more people will rely on online delivery, especially for grocery and household staples. Given this situation, it might be prudent to invest in retail stocks that have a strong online presence.
Campbell Soup Company CPB, together with its subsidiaries, is a worldwide manufacturer and marketer of high-quality, branded convenience food products.
The company’s expected earnings growth rate for the current year is 25.7%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days. Campbell Soupcarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
eBay Inc. EBAY operates as an online shopping site that allows visitors to browse through available products listed for sale or auction through each company's online storefront.
The company’s expected earnings growth rate for the current year is 10.6%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. eBay has a Zacks Rank #2.
Flowers Foods, Inc. FLO produces packaged bakery foods in the United States. The company specializes in baked food products as well as produces a wide range of breads, buns, rolls, snack cakes and tortillas.
The company’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 60 days. Flowers Foods carries a Zacks Rank #2.
Sprouts Farmers Market, Inc. SFM, which operates in a highly fragmented grocery store industry, has a unique model that features fresh produce at the center of the store, an expansive bulk foods section, and a vitamin department focused on overall wellness.
The company’s expected earnings growth rate for the current year is 29.6%. The Zacks Consensus Estimate for current-year earnings has improved 22.7% over the past 60 days. Sprouts Farmerssports a Zacks Rank #1.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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