The State of Retail
The current state of retail is thriving. It’s so strong, in fact, the NRF (National Retail Federation) announced a few weeks ago it had revised its original 2021 retail forecast—upward. This year the NRF expects retail sales to soar between 10.5% and 13.5%, ranging from $4.44 trillion to $4.56 trillion. Plus, as consumers continue to shop, non-store and online sales will likely see an even bigger increase—from 18%-23%, reaching $1.09 trillion to $1.13 trillion—as consumers’ shopping habits have shifted to relying on online shopping. What’s more, these statistics exclude revenue from automotive dealers, gas stations, and restaurants.
For comparison, retail sales in 2020 just topped $4 trillion, $920 billion of which was revenue generated by e-commerce and other sales made through non-store channels. The good news is partly due to projected GDP growth, which the NRF now says will “approach 7%, compared to the 4.4%-5% forecasted earlier this year.”
Consumer Spending Surges
Both the GDP growth and the retail sales surge can be attributed to consumers who are finally free to shop both online and in-store. NRF President and CEO Matthew Shay says, “The economy and consumer spending have proven to be much more resilient than initially forecasted.” And Jack Kleinhenz, NRF’s Chief Economist, adds, “We are seeing clear signs of a strong and resilient economy.” And given the soaring consumer spending, Kleinhenz anticipates, “the fastest growth the U.S. has experienced since 1984.”
The new numbers were announced at the inaugural NRF State of Retail and the Consumer, where some of the nation’s most successful retailers, including executives from Sephora, Albertsons, and Ikea, shared valuable insights. One of the main messages the NRF wants to get across to retailers is that there’s a “new citizen shopper” who is laser-focused on the credibility and values of the companies they do business with.
You Are Your Brand
The panel said retailers need to be clear about their brand’s identity, know who their customers are, and the best way to align with them. And, they added, you need to be “ok with [the possibility of] losing some customers.” In addition, they said, retailers should realize:
- You can’t be one-size-fits-all to all consumers
- Delivering on your brand promise is essential
- Take time now to review your brand promise. Does it need to be refreshed?
Your brand’s promise needs to be clear to consumers as well. They’re not looking to do business as usual. Instead, today’s consumers are looking for more than just good products at great prices—they expect brands to stand for something. Consumers are particularly concerned about sustainability. And the panel said worry about climate change is universally rising.
Consumers also want the businesses they frequent to take care of their employees, prioritize inclusivity, and commit to being a better company.
Hot Retail Niches
While overall retail sales are rising, some sectors are particularly “hot” right now. For one, Javier Quiñones, president and chief sustainability officer, IKEA US says customers are exhibiting “nesting behaviors” and spending money on things they can use at home. They’re also undertaking delayed projects and spending money on home remodeling projects.
Digital Commerce 360’s 2021 Online Apparel Report, which analyzes the top apparel retailers, as well as mass merchants, shows they’ve added athleisure attire to their product mix. A report from April shows 73.6% of apparel retailers selling athleisure clothing, compared to 46.4% last June.
According to a forecast by Mastercard SpendingPulse, which measures in-store and online retail sales, back-to-school sales will grow 5.5% from 2020 and 6.7% from 2019.
Year-over-year sales for apparel, likely to be one of the strongest categories, are expected to increase 78.2%.
The NPD Group says toy industry revenues grew 27% ($1.5 billion) between January and April 2021. Yes, that growth was in the first four months of this year. Top categories/sellers include:
- Outdoor & sports toys, which posted sales of $1.6 billion
- Plush toys had the fastest dollar growth vs. 2020 sales growing 44%
- Games and puzzles appear to be slowing down, but 2021 sales “are still strong”
- Strategic trading cards had top-dollar growth, “driven in large part by Pokémon”
- The top-selling brands were Pokémon, Barbie, Star Wars, L.O.L. Surprise!, Marvel Universe, Hot Wheels, Little Tikes, Nerf, LEGO Star Wars, and Funko Pop!.
Changing Consumer Behaviors
According to Vivek Sankaran, president, and CEO, Albertsons Companies, one of the biggest changes in consumer behavior is their adoption of omnichannel shopping behavior. Jean-André Rougeot, president, and CEO, Sephora Americas, agreed, saying that even as customers came back to newly reopened stores, online sales were still high.
The Q2 2021 Consumer Trends Report, just released by Jungle Scout, explores how spending a year in lockdown “shifted consumers’ priorities, their comfort level in resuming pre-pandemic activities, and what they’re buying in 2021.”
Key insights from the report include:
- 32% of consumers say they are looking for pre-owned products when they shop online.
- When ordering online, 80% of consumers expect free shipping when spending a specific dollar amount of items, and 66% expect free shipping for all orders.
- Shoppers want immediate gratification—91% of consumers expect to receive an online order within a week, and 9% expect all online orders to arrive the same day.
Check out the report for information about the products that boomed in 2020 and whether consumers plan to keep their new “nesting” habits like cooking, making coffee, and working out at home.
The Mastercard SpendingPulse forecast shows consumers still want low-contact experiences and options, such as buy-online-pickup-in-store, curbside pickup, and other contactless experiences.
NRF’s Shay says consumers don’t want to give up their new behaviors. And, he adds, they’re looking for “convenience and safety.”
The NRF says this isn’t about going back to normal. Instead, “reimagine a new world,” where, says Sephora’s Rougeot, there is “meaningful change.” And Albertsons’ Sankaran says retailers need “to be stewards of the communities we operate in.”
There’s a lot to digest here. If you need assistance, a SCORE mentor can help. You can find one here.