U.S. consumers are beginning to reemerge from what became normal during the pandemic and finding their way to the next phase of normal. The concept of putting lockdowns and stay-at-home limitations in the rearview now feels like a real possibility. The idea of recovery comes to mind when thinking about the segments of retail that struggled, but there are segments that had a banner year in 2020 and are facing a different kind of uncertainty in the year ahead. Rather than recovery, now is the time for all manufacturers and retailers to understand how they fit into the consumer’s current and evolving decision-making process and then reposition accordingly.
Factors like vaccination rates and the lifting of pandemic restrictions are key to moving through the four stages of NPD’s Road to Retail Repositioning. These factors, which will directly impact consumer behavior, will vary across the country. For this reason, we’re continually monitoring consumer purchasing indicators, on the national and regional levels, to understand shifting consumer spending behaviors.
There isn’t much that is under our control regarding the pandemic, but here are some important considerations for managing the uncertainty.
Don’t take early gains at face value.
In this climate, it is important that we don’t take the numbers too literally and risk overreading the positive and negative changes that lie ahead. Early reads may show people going out and buying dresses, but they may not continue to sell at that high level. We don’t know when ‘normalized’ spending will come, or what it will look like.
Embrace unexpected connections.
It is critical for manufacturers and retailers to embrace the element of looking beyond their immediate parameters to understand what’s going to happen in their own part of the business. As we enter stage 1 of retail repositioning, we will begin to see the impact lifestyle changes have on businesses. Increases in things like travel and in-person activities may benefit categories that haven’t been in demand, like apparel, footwear, and accessories, but could negatively affect other categories, like small appliances and housewares, that may face more competition for those discretionary dollars.
The psyche of the consumer is the biggest factor.
Lifestyle actions will drive when and how things happen. The impact will be fluid, and contingent on how well consumers’ needs and wants are being met. Are consumers becoming more comfortable engaging in in-person shopping, and shifting spending toward experiences? Is retail delivering the safe in-store shopping environment consumers want? Can the consumer find the product they want, as they focus on shopping for the here and now?
The road ahead for retail isn’t yet fully paved. There is still too much uncertainty to know what lies ahead. In order to have a successful journey, we’ll all need to keep our eyes on the road and anticipate and navigate the twists and turns along the way.
Follow this link to learn more about each of the four stages in NPD’s Road to Retail Repositioning.