U.S. consumers demonstrated remarkable resilience in 2020. Between June and late-December, year-over-year discretionary retail sales increased in 24 out of 30 weeks, our retail early indicator data shows. Much of this was driven by consumers’ appetite for buying products that helped them make the most of their time at home. Retailers helped meet this demand by instituting new safety protocols in stores and improving shopping experiences online. This is not to suggest even performance across industries and categories, as some were hit harder than others by COVID-19’s impact in 2020. Companies in the spaces that suffered more will look to the coming year as an opportunity to reverse course.
As we start 2021, the market landscape remains uncertain. The vaccines bring hope of a much-needed return to normalcy, though its rollout across the U.S. will take months. In this time of rapid change, we analyzed the purchase patterns that shaped 2020 to inform our view of the important considerations for businesses across retail, food, entertainment, and tech as the new year begins. With so many unknowns, this list is not meant to be comprehensive, nor is it meant to remain static throughout the entire year. It serves as a reference point to help companies across a wide range of industries plan for the near future and navigate the rapidly evolving marketplace.
1. Shifting Priorities
Since the onset of COVID-19, consumers have purchased for the “here and now,” seeking ways to optimize time spent at home, Chief Industry Advisor Marshal Cohen said. Once people return to work and going out, that could change. We may see strong demand for categories that have been less in demand, such as apparel, beauty, and footwear, as consumers look to refresh their wardrobes. At the same time, there may be a temporary pullback in some industries that did well in 2020, and specifically among products that improve home life as many consumers have already bought those products and will be eager to re-prioritize their spend.
2. Older Shoppers Grow Accustomed to E-commerce
In the early weeks of social distancing, it was expected that older shoppers would flock to e-commerce. A surprise, however, was that online shopping growth among this group remained strong months after restrictions were put in place, Cohen said. Across retail (including grocery and general merchandise) shoppers aged 65+ made 15% of their purchases online between January and October 2020, up from 10% in 2019, our Checkout data shows. In 2020, this group was the fastest-growing in terms of online spend. As the vaccination rollout progresses, Cohen expects many in this group will plan to return to their preferred brick-and-mortar locations to shop and socialize. Still, it will be important to follow the long-term implications of older consumers adopting e-commerce and monitor the extent to which online shopping displaces in-store shopping for this group.
3. Flexible Fulfillment
Many retailers substantially enhanced their delivery and buy-online-pick-up in-store (BOPUS) options toward the end of the last decade. This proved prescient given the need for the safety and convenience of online shopping when COVID-19 precautions hit. Since restrictions began, 34% of consumers reported using a BOPUS option; 31% said they used a curbside pick-up option, our November 2020 Omnibus Study shows. With consumers growing increasingly accustomed to online shopping, traditional retailers must continue to maximize their digital presence by blending online ordering with in-store fulfillment. The goal is to make sure their store footprint remains an asset rather than a liability as consumers accelerate their use of digital ordering options even more in 2021.
Once consumers feel more comfortable returning to their pre-pandemic shopping behaviors, it will be important to monitor the degree to which digital ordering on the dot-coms of traditional retailers and brands (via DTC) continues. How will these companies capitalize on the treasure trove of data they gathered on their e-commerce platforms? How will they maximize the digital capabilities they rapidly scaled up? What will they offer their online customers that no other retailer can? The answers to these questions will set the tone for future retail trends in 2021 and beyond.
4. Home Productivity
The rise of remote work and learning has fueled the need for consumers to develop productive workspaces in their homes, said Consumer Technology Analyst Ben Arnold. As a result, sales of productivity-related items like mice (+53%), keyboards (+68%), monitors (+90%) surged in the 6 months ending November 2020 compared to the same period in 2019. Now that many consumers have purchased these basics, companies in the productivity space should look for new opportunities to upgrade consumers’ home workspaces to make the work-from-home experience even more seamless. Additionally, because many employees may continue working from home even after the COVID-19 threat fades, companies will need to determine how to make the corporate supply closet more accessible for a work-from-home workforce.
5. Gaming Adoption
Our 2020 Evolution of Entertainment report shows video game engagement in the U.S. grew significantly in 2020 in terms of participation, time, and spend. The number of consumers playing video games in the U.S. increased 6 points to 79%. Total time spent gaming increased 26% and total spend increased 33%. Growth was particularly strong on mobile, which is the most accessible platform to a wide audience. Consoles also saw notable increases, driven by families seeking options for group play and those seeking options for online play. “In 2020, video games was one of the most consistent growth categories in terms of overall participation and investment relative to 2019. This may simply reflect an acceleration of trends that were in effect prior to the pandemic. If this is the case, then the gaming market could experience continued growth without a post-pandemic pullback. If not, however, we may see a post-pandemic valley before returning to growth. It all rests on engagement,” said Video Games Analyst Mat Piscatella.
6. Destination Decisions
Although many consumers are putting their jet-setting ambitions on hold, certain kinds of domestic travel, particularly driving-distance destinations primed for outdoor adventure, are better positioned for the months ahead. Our retail tracking data shows outdoor equipment sales surged in the second half of 2020 as consumers sought activities that allowed for social distancing. Year-over-year sales of items like paddle sports (+53%) and camping equipment (+31%) grew at the start of Summer 2020. Additionally, backcountry-related snow sports equipment sales in the U.S. grew 76% in the opening months of the snow season (August through October 2020) compared to the same period in 2019. With so much uncertainty, travel in 2021 is bound to look different than in years past. It will be important to watch how exactly travel changes, particularly the degree to which consumers’ travel destinations reflect their newfound interest in the outdoors.
7. Ordering for the Pantry
Digital orders of groceries were growing rapidly before COVID-19’s onset, and precautions accelerated this in 2020. This trend is expected to continue. During Summer 2020, 42% of U.S. adults reported shopping for groceries online at least once in the past 30 days compared to just 29% in the same period last year. “The lockdowns forced consumers to suddenly rethink their food acquisition and preparation strategies. Technology came to the rescue and helped ease the stress of obtaining and preparing food, and it’s highly unlikely that consumers will stop using these technologies when the pandemic ends,” Food Industry Analyst Darren Seifer said. While increased digital ordering is bound to stick, we expect changes in the types of food ordered. For instance, nutrition took a back seat during the 2020 COVID-19 period, because consumers were reprioritizing; planning for health became more of luxury for many. Now that consumers have found new routines and more ways to pass time, their stress-eating may relax as they settle into their new realities.
8. Brands Entering New Spaces
Companies in every industry have had to remain agile, adjusting their business models to accommodate the rapid shifts in consumer lifestyle patterns. In the fashion space, some brands were able to efficiently design and produce protective masks, which became a new feature in many consumers’ wardrobes and a popular stocking stuffer for Holiday 2020. Additionally, brands in the hard-hit makeup business suffered this year as many consumers kept it casual while working from home. Softer declines were recorded for products that focused on fun over function — some looked to makeup to lift their spirits. Although the overall makeup market declined sharply in 2020 year-to-date through October, makeup collaborations declined at a much softer rate. In fact, sales of those products were actually higher in 2020 compared to two years ago. Those makeup collaborations required brands to engage with influencers and find new opportunities to stay on top of emerging pop-culture trends. Although the next several months will continue to be difficult, we expect more innovation by fashion and beauty brands. This will help the industry weather the storm and cultivate loyalty.
9. Home Fitness Focus
COVID-19 precautions required consumers to make changes to their fitness regimens. As gyms across the country ceased operations, sales of treadmills (+127%), stationary bikes (+221%), and free weights (+97%) surged versus the prior year in the six months ending November 2020. With lingering social distancing needs, many consumers won’t immediately return to paying for gym memberships. For players in the sports and fitness space, it will be critical to keep these customers engaged. Companies must ask: What can be done to keep consumers investing in a particular category or activity? The equipment consumers recently purchased won’t need to be replaced any time soon. In the meantime, companies that sell products ranging from performance wear to connected devices should promote complementary purchases that can aid the home fitness experience.
10. Restaurants Remain Viable
Despite the difficult market conditions inflicted by COVID-19, we remain optimistic about the long-term prospects of the foodservice industry. While restaurant transactions at major chain restaurants have declined overall throughout COVID-19, our CREST® data identified more than a handful of major restaurant chains that experienced double-digit growth in customer traffic compared to 2019. We expect chains that did well in 2020 will continue to succeed in 2021. This suggests outlets that offer good value and quality can find success in any environment. Additionally, many of the ordering and pick-up innovations in the off-premises business developed in 2020 will gain even more traction, enabling increased convenience in the future.