The Perplexing Nature of Pandemic Shopping Habits
Retail Sales Fall in November
Recently released data shows that US retail sales fell by 1.1% in November. This marked the second consecutive monthly decline for retail sales, as unemployment remains high and many stores are closed or operating under restrictions. In a report, the Commerce Department suggested the drop in spending was a sign of a slowdown in economic recovery. Before October, retail sales had been trending upward since April.
Retail sales were down last month for car dealerships, clothing stores, restaurants, electronics stores, and furniture sellers. Meanwhile the United States added fewer jobs in November than it had in the six preceding months. New unemployment claims also shot toward a three-month high in the first week of December.
Spending on Luxury Goods Climbs
As overall retail spending is down, spending on luxury items is on the rise—so much so that brands like Chanel and Louis Vuitton (LVMUY) have increased their prices. Luxury groups like Neiman Marcus (NMG) and Saks Fifth Avenue say that over the past few years, they have noticed young consumers are more eager to spend money on experiences than on retail items. Now that opportunities to travel, go to concerts, and buy other experiences, are reduced, some consumers are rerouting disposable income toward luxury products.
While wealthy shoppers seem to be buying more expensive jewelry, handbags, and shoes than they would have last year, many less affluent shoppers are also splurging on premium items heading into the holidays. Because there are fewer opportunities to spend money at restaurants and many are not traveling to see family this holiday season, people are putting extra cash toward gifts, holiday decorations, and other objects that they might not normally buy. “Consumers are gilt gifting, sending bigger, better gifts, and rewarding themselves.” said Marshal Cohen, Chief Adviser at NPD Group.
Ecommerce Platforms Get Creative
Though retail sales are lower overall, much of the shopping that is happening is taking place online. This year sales on ecommerce platforms could reach $798.5 billion—up from $600.1 billion in 2019. Verishop, the ecommerce lifestyle goods platform, hopes to piggyback on that trend as it introduces a new feature called Shop Party.
The new Verishop feature invites users to host online shopping events where they can chat with friends via text and video, see what others are browsing, and “like” what is in their friends’ shopping bags. The idea is that customers who use the Shop Party feature will feel like they are shopping in brick and mortar stores with friends. So far, it is unclear whether live shopping events will take off in the United States, though they have seen success internationally, especially in China.
The retail industry has faced innumerable challenges this year. Stores and brands have also found creative ways to connect to customers as their habits have been upended. Analysts expect that many of the habits formed during this time will stick around long after the pandemic subsides.
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