4 Trends to Watch in the Coming Months
U.S. Government officials and health organizations are cautiously optimistic that the worst days of the pandemic are behind us. As the economy grows and vaccination rates rise, people are gradually resuming their everyday activities. Consumers are traveling, dining in restaurants, and going to theatres. Even the beleaguered retail industry is proving to be more resilient than many retailers anticipated. According to the NPD Group, a data analytics firm, retail sales revenue grew 17 percent from January 1 through May 8. Surprisingly, this reflected an 18 percent increase over 2019. While its impossible to predict the future, analysts can identify specific consumer trends emerging as a result of the pandemic. At a recent industry event, NPD’s team of experts explored four key trends that retailers should be aware of to prepare for the remainder of the year.
Experiential Spending Makes a Comeback
When people’s activities are restricted, they tend to go into overdrive to reclaim the experiences they enjoyed before the government restrictions put in place. Consumers also spend more on products related to experiential activities. The prices of airline tickets are rising again because people are traveling more. There is also a resurgence in other experiences, such as outdoor concerts and large weddings. NPD believes the shift in how people socialize will spur the demand for products related to these experiences.
Retailers are challenged to plan for those consumer behaviors that will take hold and stay around for a while. “Some experiential spending is already coming back strong, as consumers go more, dress up more, place more emphasis on appearance and health, and start to spend more on tangible products related to 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 Ripple Effect of the Pandemic Creates “lifestyle pillars.”
When everyday routines became confined to indoor spaces, purchases related to this sudden shift in our lifestyles rose dramatically. Suddenly, there was a greater focus on home-based offices, online teaching, fitness classes, entertaining, and cooking instruction. Currently, these purchases based on lifestyle activities continue to have a positive impact on driving retail growth. Cohen says, “Sports equipment, home products, consumer technology, and toys enjoyed strong sales last year. While some categories, like activewear, will continue to receive a complementary boost from the continuation of the pandemic lifestyle pillars and renewed experiential spending, sleepwear and others will not.”
Consumers Shop for Immediate Needs
The pandemic caused uncertainty for consumers and retailers. Whereas consumers previously planned their shopping well in advance, that changed during the pandemic. Services such as free shipping, curbside pickup, and 2-hour grocery deliveries fulfilled consumer’s need to receive a prompt response to their purchasing needs. It will take time for retailers to adjust to the new cadence. “Consumers began to shop mainly for their immediate situations, rather than thinking about what they might need down the road of for the season ahead,” Cohen said. “We can expect some of that behavior to continue, even as more stores reopen and consumers get comfortable shopping in-person again, and retailers will need to adjust their seasonal planning to win the purchase.”
Digital Transformation Accelerates
The pandemic rapidly accelerated the digital transformation that had begun several years earlier. Even consumers who had never made online purchases before the pandemic quickly learned how to shop online. While specific product categories need to be touched, tried-on, or demonstrated benefit more from being presented in a physical store, others thrive online. “When it comes to shopping, it’s apparent now that the consumer does not recognize any lines of demarcation at all,” says Matt Powell, senior sports industry advisor for NPD. “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.”