By Marshal Cohen, Chief Industry Advisor, Retail, The NPD Group
Retail sales across 15 key general merchandise industries have seen some week-over-week increases in discretionary spending through April and into early May. While these increases have value, the reality is most recent purchases reflect the interim buying phases that consumers are moving between – buying phases that have little implication for future retail success. The biggest value lies in understanding the consumer mindset associated with the latest retail performance in order to keep a pulse on it as it continues to shift – because it will.
What’s hot now, may not be hot tomorrow
NPD has been tracking performance of categories spanning fashion, home, toys, tech, and more during the outbreak as an early economic indicator. In the week ending May 2, 2020, 12 of the 15 top year-over-year growth categories were ‘one and done’ purchases that will fuel growth today, based on the current environment – products like vacuum sealers, home soda machines, electric can openers, ride-on toys, men’s trimmers, and shipping scales. While these sales increases are certainly a positive in terms of the consumer’s willingness to spend, we need to see more wins in categories that relate to recent lifestyle changes. The trends that come from these lifestyle changes will drive replenishment, like those we’ve seen in hair color, video and sound cards, gaming devices, doll accessories, and puzzles. These, combined with yet-to-be tapped adjacent opportunities, are important to sustaining future growth.
A new ‘normal’ means a new way of thinking and shopping
The rapid changes to the retail landscape prior to the pandemic created a need to think differently to meet the mix of current and future demands of the consumer, which will continue to be critical on the road to recovery, and even after retail is back in business. So far, we’ve seen a shift in focus from essentials and general at-home lifestyle needs toward more entertainment and self-care. As consumers emerge from homebound restrictions, they will turn their attention to a new set of needs, and brands should plan strategies based on where their products fit in terms of what’s hot now and what is likely to be hot in the future. But, with so many things still unknown, the consumer is likely to be more tentative when it comes to making purchases. Even seasonal opportunities like Back-to-School will be shortened with many consumers taking a wait-and-see approach to shopping. Retail will need to be nimble in order to effectively respond as looming questions are answered, and tailoring their response by region in many cases.
Consumers will be even more deeply engrained in a ‘use now, buy now mentality’, meaning a wide net of innovation should be cast on any future retail strategy. Online capabilities that are basically a requirement to do business today will need to adjust to meet these new expectations going forward. Retailers will need to find creative ways to make it not only comfortable, but also exciting to shop again. A different kind of digital dialog that goes beyond traditional descriptions, addressing the touch, feel, and quality of a product, can be a powerful tool in making up for some of what is lost in the virtual shopping environment. Consumers will be looking for new products or alternative solutions that address their new needs, and retail can help by representing product differently in anticipation of those needs.
We are marketing to a new normal, whatever that will be.
Source: The NPD Group/Point-of-Sale Early Indicator Report, NPD Universe, WE May 2, 2020; Industries Included: Apparel, Footwear, Auto Aftermarket, Watches, Housewares, Small Domestic Appliances, Toys, DVD/Blu-ray, Sports, Accessories, Consumer Technology, Office Supplies, Prestige Beauty, Juvenile Products, Video Games (physical only)