1. Consumer Financial Concerns Not Subsiding
• More consumers feel safe going to the store: 30% in April, 42% in May.
• In-store shopping intention rise: the number of consumers who intend to predominantly purchase online is gradually falling, in restaurant, apparel and electronics.
• Share of wallet: planned cutbacks for the upcoming month around more discretionary categories such as restaurant, entertainment and travel are still present.
• Fewer consumers want to continue BOPIS (buy online and pickup in store): 32% of consumers plan to use BOPIS to avoid delivery costs, but they still concern about the safety.
• Consumers stick with the brand names they trust: 52% of consumers indicate they will stick with the brands they trust prior to the crisis. 42% will purchase more from brands that have responded well to the crisis.
• Impulse purchasers outnumber stockpilers: while stockpiling remained the most prevalent retail behavior (56% in mid-April, 53% in mid-May), consumers are now more likely to make an impulse purchase if they find a great deal on a non-essential item (48% in mid-April, 55% in mid-May).
• Optimistic signals for hospitality: 31% of US consumers plan to stay in a hotel for leisure travel within the next three months, 24%in mid-April.
• Mobility sentiment: 49% US vehicle owners are planning to keep their current car longer than originally expected.
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2. Fashion Stockrooms Are Bursting at the Seams
• For all US retailers, the inventory-to-sales ratio —a measure of how much stock they hold relative to monthly sales hit an almost 11-year high of 1.53 in March.
• At Zalando, one of Europe’s biggest fashion e-commerce players, garments now spend a median of five weeks on the site before being sold, which is two weeks in the fourth quarter last year.
• The average fashion chain can cancel less than one-fifth of orders placed with suppliers. Since many large retailers source garment from Asia up to six months in advance, most of their inventory for the spring and summer was already in warehouse or in transit when stores closed.
• Clothing prices have held up surprisingly well online. Discounting activity was lower in April than during the same month if 2019.
• Hard-pressed warehouse and delivery workers are struggling to fulfill existing web orders online, giving many retailers a reason to avoid a surge in digital sales.
• The task of cleaning stock in the aftermath of the pandemic could depress retailers’ profit margins for years.
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