It's fair to say 2020 has not been a solid year for many ASX retail shares. While Aussie supermarkets have seen an uptick in demand, there are fears about the retail sector in general.
After all, it wasn't in great financial shape before the coronavirus pandemic. We'd seen several high-profile brands enter voluntary administration including kikki.K, Jeanswest, and Colette.
But with some positive retail data being released yesterday, could now be a good time to buy ASX retail shares for the long term?
Why ASX retail shares could surprise us in 2020
In some good news for ASX retail shares, the Australian Bureau of Statistics (ABS) released a preliminary report indicating retail turnover surged 8.2% higher in March. That's a new month-on-month record increase, beating the 8.1% in June 2000 before the GST kicked in.
We saw total turnover of $30 billion in March 2020 which is an impressive figure. That's especially so when you consider how many Aussies are doing it tough right now.
Unsurprisingly, Aussie supermarkets were some of the biggest winning ASX retail shares in March. There was a 22% increase in consumer spending for these supermarkets including Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).
We've seen panic buying turn to consistent supply re-stocking in 2020. That's good news for the ASX supermarket shares which have outperformed many S&P/ASX 200 Index (ASX: XJO) peers this year.
The supermarkets weren't the only ASX retail shares to benefit from increased spending last month. The likes of Harvey Norman Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH) benefitted from more people working from home.
Is now a good time to buy?
I think we have to bear in mind the lag that is inherent in this sort of data. I'll be watching the April 2020 retail data closely to see how the economic shutdown is impacting spending habits.
While the Aussie supermarkets seem stable for now, I wouldn't be buying discretionary ASX retail shares. That means I'd probably be steering clear of the likes of Super Retail Group Ltd (ASX: SUL) for the time being in favour of Coles or Woolworths.
