Retail earnings season is set to kick off next week, and this round of results will be as closely watched as any.

The industry has been turned upside down by the COVID-19 pandemic, which has forced nonessential retailers to close their doors, while shoppers have flooded other stores to pick up essentials like food and cleaning products.

It's always a good idea for investors of all stripes to follow the retail industry, as consumer spending makes up 70% of the U.S. economy, and retailers naturally have their fingers on the pulse of the American consumer. However, this time around the results and management commentary will be especially important. 

Not only do the reports cover the month of April, which we only have limited data on so far, but retail executives can also provide insight on where Americans are spending these days, as trends have shifted quickly since the pandemic hit. Below are three key earnings reports to look out for next week.

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1. Walmart

Nearly 10% of nonautomotive consumer spending takes place at Walmart (NYSE:WMT), so how the retailer performs at any time says a lot about the state of the American consumer. Walmart has been mum about its business results thus far during the pandemic, but the retailer has hired as many 200,000 new employees, showing a spike in consumer demand. Walmart is the country's biggest grocery retailer and makes a slight majority of its sales from groceries, so it's not surprising to see it ramp up its workforce.

However, because of social distancing rules and fears about the virus, retailers haven't always been able to convert higher demand into additional sales. Target (NYSE:TGT), for example, said that in-store traffic actually fell in the first few weeks in April, though it saw a surge in online sales. Costco saw conventional retail sales jump in April, but overall comps were flat due to the closure of departments like optical, hearing aids, and photo. 

The other big question for the retail giant is if it will be able to convert those higher sales into profits, since additional expenses for employee bonuses, cleaning, and supply chain needs are likely to eat into margins. Analysts expect a modest increase in profits per share.

2. Home Depot

The home improvement sector has been mostly a black box since the pandemic started. Home improvement retail sales rose modestly in March, according to the census bureau,  but there's been some speculation of a surge in demand in April as Americans stuck at home with limited ways to spend money focused on home improvement projects. Internet searches jumped for home improvement projects, and sales at Wayfair, the online home goods retailer, also surged, though that may have been in part because competing stores were closed. Additionally, ANGI Homeservices CEO Brandon Ridenour said he saw the beginnings of a V-shaped recovery in the company's home services marketplace in April. 

Home Depot (NYSE:HD), the nation's leading home improvement retailer, cut store hours in order to allow for cleaning and restocking of high-demand items, and  the company has also suspended its spring promotional event and its usual hiring surge in order to allow for social distancing at its stores, a sign that sales will likely be down from a year ago. However, Home Depot's earnings report will provide much-needed color on the sector; its performance has implications for a number of industries, including construction and real estate. Analysts are anticipating revenue of $27.3 billion, up from $26.4 billion a year ago, while they see earnings per share falling by a penny.

3. Target

Though Target is smaller than Walmart, it may present a better snapshot of American retail than anyone else. Unlike Walmart, Target is well represented in both cities and more rural areas, and it tends to capture a wider income demographic as its "cheap chic" brand appeals to both lower-end and higher-end consumers. It also derives a roughly equal percentage of its sales from categories like groceries, beauty and household essentials, apparel, home goods, and electronics and entertainment.   

Target has been more forthcoming than most retailers during the pandemic, giving investors a good sense of its performance so far. In an April 23 update, the company said it initially saw a spike in food and beverage sales in March, which faded in April, but still remained higher than normal. Apparel and accessories sales have been down for the duration of the pandemic, while sales of electronics, entertainment, and home goods jumped in April. Digital sales also soared 275% through the first three weeks in April, but costs have ballooned as well. The company said most of its first-quarter profit would be wiped out by spending on additional employee wages and bonuses, and higher supply chain expenses in the digital channel.

Since Target management has so far been detailed about the company's performance during the pandemic, investors should expect a clear picture about how business has changed in May as some states begin to reopen and how management sees the crisis evolving.