Retail sales revenue in the US grew 17% from January 1 through May 8, 2021, according to The NPD Group. Even more strikingly, retail sales increased 18% over 2019. Growth in the US economy continues to rise as vaccination rates increase. More importantly, as more consumers, as well as businesses and schools, begin to map their post-pandemic paths forward.
A recent “Future of Style” event, hosted by The NPD group, explored the major trends affecting global industries. The sectors covered included beauty, accessories, apparel, footwear, and sports. Experts from NPD focused on the key opportunities and challenges faced by retail companies and brands. NPD says retailers and consumers are beginning to emerge from the global pandemic. The company highlights four important overarching retail trends to watch in the coming months.
Experiential spending returns
US and global vaccination rates are rising. The company believes consumers will once again start spending on travel, dining out, and other experiences. This socialisation shift will create more movement in products related to emerging needs. As consumer behaviour starts to bounce back, leaders in the retail industry are looking beyond what happened last year. The company urges retailers to focus on the consumer behaviours that will change. As well as those that could remain in force for months, or even years, into the future.
“Some experiential spending is already coming back strong. Consumers are beginning to do more, dress up more, place more emphasis on appearance and health. Starting to spend more on tangible products, travel and other experiences,” said Marshal Cohen, chief retail industry advisor for NPD. “However, as this pent-up demand works itself out in the coming months. We can also expect those rising sales to throttle back a bit in apparel, footwear, and other categories.”
The continuing power of the pandemic “lifestyle pillars”
Purchasing related to home-based work, education, fitness, entertaining, and healthy home all ramped up mightily last year. The continuation of these lifestyle pillars continues to propel retail growth upward. Even so, these pandemic pillars will eventually start to moderate, as restrictions ease and consumers revive more of pre-pandemic activities.
“Sports equipment, home products, consumer technology, and toys enjoyed strong sales last year,” said Cohen. “While some categories, like activewear, will continue to receive a complementary boost from the continuation of the pandemic lifestyle pillars. However, renewed experiential spending, sleepwear and others will not.”
Retail’s cadence is shifting
Consumers used to plan their shopping carefully weeks or even months ahead of time. However, that forward-looking focus shifted appreciably last year. Due to all the uncertainty surrounding the pandemic, along with the convenience of one and two-day shipping, curbside pick-up, and other convenient options. The retail cadence became much more immediate.
“Consumers began to shop mainly for their immediate situations. Rather than thinking about what they might need down the road or for the season ahead,” said Cohen. “We can expect some of that behaviour to continue, as more stores reopen and consumers get comfortable shopping in-person again. Retailers will need to adjust their seasonal planning to win the purchase.”
“Shoppers have deferred purchases for many reasons,” said Matt Powell, senior sports industry advisor for NPD. “There was a surge in softlines sales when kids went back to school this spring in parts of the country. This is one example when the shift to buying when it’s needed could disrupt the traditional back-to-school shopping season.”
Fast-forward for digital transformation
The leading story in retail was the steady digital transformation of many sectors of the retail market. However, after the pandemic hit, the size of eCommerce growth for some industries leapt forward by three years. At the same time, it still keft plenty of room to grow. Although beauty, fragrance, and apparel, still benefit more from in-store traffic, due to the need to see and try on products, housewares, sports equipment, and other retail categories will increasingly reap benefits from the consumer’s accelerated migration to shopping online.
“When it comes to shopping, it’s apparent now that the consumer does not recognise any lines of demarcation at all,” Powell said. “Shopping is all one thing to them now, no matter where it happens. The faster retailers can recognize and accept that premise, the better – and more profitable – they will become.”
Enterprise Times: What this means for business?
NPD says the US retail industry is now doing better than many retailers expected last year. The company suggests the US retail is well on the road to recovery from the Covid-19 pandemic. The company is in a privileged position to understand the pulse of retail. Not just in the US, but around the globe. NPD was the first to bring sales tracking and insight into many industries. The company continues to innovate with advanced modelling and analytic services that identify sales and market share drivers. NPD also introduced new research methodologies to better understand evolving consumer tastes and retail dynamics. Therefore retailers and online merchants need to pay notice to the company’s forecast of future trends of consumer behaviour.
Interestingly a trend missing from the NPD’s analysis is the rise of the hybrid shopper. Consumers who carry out their shopping through a mixture of online and in-store trips. Even amongst the group of hybrid shoppers, there has been a distinct shift in the proportion buying online this year. Perhaps NPD can commission further work in this area.