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The pandemic shifted consumer spending from fashion goods to utilitarian products. However, there has recently been a slight trend in online shopping and browsing data indicating consumers are looking for fashion merchandise.
Retailers will need to contend with the shift in consumer spending as the economy emerges from decline and there is great uncertainty as to when discretionary spending will increase. As seen with other economic drops in spending, during and after economic recovery, consumers become very value-conscious especially with fashion goods (apparel, accessories, shoes).
Shopper’s take heed in fashion merchandise categories
A resurgence of interest in online fashion goods over the past week may be an indicator of what is to be expected in retail stores as they reopen.
Contentsquare data findings show shoppers browsing fashion sites with visits up 24 percent and shoppers viewing 38 percent more pages, all signaling greater engagement than before the shutdown of stores. Mike Cassidy, lead storyteller of Signifyd , states, “People are getting tired of living the groundhog day life, where every day is the same over and over. Maybe buying fashion apparel makes us all feel a little better and gives our spirits a spark.”
According to Signifyd’s Ecommerce Pulse data, the e-commerce spending trend experienced record acceleration, shooting up nearly 25 percent during the week that ended April 20. Fashion apparel sales (includes luggage) were up 38 percent for the week , most likely fueled by government stimulus checks. However, Cassidy noted a major portion of the increase in fashion spending consisted of basket sizes under $250 indicating a more value-conscious approach.
Chris Bixby, vice-president marketing of Sezzle, discussed a recent survey of users from early April where customers said they would spend less on money fashion goods. However, when looking at the data for the past four weeks, customers have not reduced spending in fashion categories. Bixby states, “Online purchasing in the fashion goods area has been up for categories such as beauty and shoes while apparel has remained flat.”
Value-driven consumerism
Consumers are sensitive to spending money and they want the money they do spend to work for them. Bixby states, “Sezzle allows shoppers the opportunity to have better purchasing power and take control of their budget. Customers have stated this type of purchasing power helps to ease anxiety in an uncertain environment.”
Budget-conscious and value purchasing decisions will be driving consumer spending over the next few months. The buy now, pay later solution will grow tremendously in the next year as younger shoppers fear getting into debt but want to be able to afford discretionary merchandise like apparel, shoes and handbags.
When stores reopen, there will be no shortage of inventory supply. Outlet stores like Nordstrom Rack
and Bloomingdale’s Outlet will have plenty of fashion merchandise from being closed, inbound shipments and receiving merchandise from the full-line stores. The off-price segment, T.J. Maxx and Ross, will benefit from missed spring sales from many full-line stores that will sell merchandise to the off-price retailers. The consumer will benefit from excess inventory in fashion goods with steep discounts in a heavily saturated market.
Pent-up demand will drive fashion purchases
As physical stores begin to open back up, a resurgence of spending on fashion goods may result from pent-up demand. Many factors, however, will impact consumer spending including how quickly people get back to work, additional government stimulus initiatives and precautionary measures that retailers put in place to ensure safe shopping environments.
Marshal Cohen, Chief Industry Advisor of NPD Retail states, “Consumers will have pent-up demand. They will look to shopping for retail therapy but will also be looking at stores’ ability to make them feel safe. Stores need to promote what they are doing to keep the “new” consumer, who will be focused on an ‘Anti-Viral Society’ – from the shopping experience to the merchandise itself.”
Consumer attitudes towards shopping environments have changed and shoppers will expect retailers to set up social distancing parameters in the stores. Cohen says, “The other big challenge is that consumers have learned to like, or even love, online shopping. Showcasing how the in-store experience is better is going to be critical to keep them shopping in stores.“
The future of brick-and-mortar retail
Some retailers will be looking for various liquidity measures to keep the business running and will close underperforming stores thereby providing sustainability to the other profitable stores. The fashion retail landscape will have fewer chain stores, an increase in smaller store formats and a different experience for shoppers.
Lauren Bitar, head of retail consulting at RetailNext says, “I think we were overdue for another shakeout, both with the large number of direct-to-consumer brands which have started to open stores and for legacy brands which have too many. And as always, from the ashes, new brands and store concepts will rise up.”
The eventual landscape may provide equilibrium for supply and demand, especially for fashion brands. The retail environment may be vastly different over the next few months, however, consumers have an intrinsic need to feel good and build self-esteem. Purchasing beauty and fashion goods provides confidence, a lift in spirits and an opportunity to freshen up an otherwise missed spring fashion season.
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