We are living in transformative times. Those of us who have spent years following consumer behavior know we are at the start of new consumer trends. In many ways we are hitting the consumer reset button. What came before us, will no longer be – and for the retailers who are living through this time of retail transformation, the reality is that many of the ways of old, may be just that – old. It’s the future the matters.
Traditionally, the Back-to-School shopping season has been a major indicator of what is to come the remainder of the year. As we move through this back-to-school season many face a consumer landscape unlike anything before, where benchmarks are non-existent…and it’s not just the Covid-19 pandemic. It’s more important now than ever that brands and retailers tune in to the signals consumers are sending and react quickly. With retailers relying on Holiday sales to make their quarter and, for many, their entire year – time is not on their side.
I had a chance to speak with Aimee Koontz and Neil Schwartz who have spent months analyzing customer, market, generational and brand trend data from Prosper Insight & Analytics monthly US Consumer Survey of over 7,500 respondents. Their latest work went deep into consumers’ shopping for the Back-to-School timeframe, and those who are not shopping this year to understand how Covid-19 and the current financial, and emotional landscape is impacting their spending and purchasing decisions, now and in the immediate future.
Aimee is a consumer, brand and marketing expert who writes on retail trends and is a guest lecturer and executive committee member on The Ohio State University Fashion and Retail Studies Industry Advisory Board for the university’s Fashion and Retail Studies Program. Neil is the president of TGP Insights and has more than two decades of marketing and consumer research experience in sports, fitness and active lifestyle categories. He works with leading financial and investment firms along with top brands in the sports footwear and apparel fields.
Gary Drenik: Aimee, as a mother of 4 you can probably attest first-hand to how this Back-to-School season is unlike any other. What are some of the biggest aspects you have seen impacting those shopping for school and college this year?
Aimee Koontz: The “Covid-19 Consumer” is grappling with aspects of life they’ve never had to experience before. Will my children be learning in person or not? How does social distancing work for my elementary school kids who don’t know the meaning of “give me space”? Have you ever peeked into a first or second grade classroom? I don’t know how you keep them in their seats let alone away from one another. Do I even need supplies? With distance learning, does it really make sense to go out and buy new clothing, shoes and accessories – or am I better off to wait and see what will happen in a few months. These are just a few of the less complex questions parents are likely asking themselves right now. I’m mom to an incoming college freshman, an incoming middle-schooler, an elementary student and a preschooler – trust me when I say it’s overwhelming. Frankly, I cannot wait till they are out of the house for a few hours each day. Throw-in the non-stability of the job market, the prospect of more layoffs and a tumultuous election year into the mix and it’s honestly not surprising that the Prosper data shows that 21% of Back to School and College (BTS/C) consumers plan to spend more over the next 90 days in the Beer/Wine/Alcohol categories, up from 55% to last year. I am doing my part for sure. As a retail marketer the biggest change I see facing retailers is trying to make sense of the new retail and consumer landscape. The “Covid-19 Consumer” is just different in so many ways. We saw an overnight shift of values and priorities – not for all, but for many – with the biggest shift being the cloud of uncertainty that is leaving so many consumers unsettled about what’s ahead financially and personally. What’s interesting is that on the surface, you see this consumer who’s ready to get back to a normal way of life, but when you dig deep – we are likely to see consumers holding on to their wallets tighter and opting for those purchases that make sense, are more need driven and they feel comfortable with making during these uncertain times.
Drenik: When we last spoke, we discussed the emotional toll Covid-19 was taking on the younger generations – as many parents and college students head back to school – what are you seeing in terms of people’s emotional health?
Koontz: Believe it or not – in August we saw a decrease over the previous month in the emotional pressures associated with Covid-19. July really seems to have been a breaking point of sorts, with more consumers reporting that they were feeling anxious, depressed and angry. Uncertainty will do that to you. Although it hasn’t gone away entirely, we are seeing these numbers starting to taper slightly as consumers do their best to put on a brave face and get on with life.
Drenik: It sounds like consumers will likely be more reserved in their spending. Can you shed light on what we can expect?
Koontz: The mix of what consumers will be spending their money on this year will look very different. Traditional BTS/BTC categories like apparel, shoes, sporting goods, and health and beauty – are all likely to be down according to the Prosper Data. Specifically, when we look at the percent change year over year – the numbers paint a fairly ugly picture. However, it’s not all doom and gloom out there. Consumer electronics like laptop computers and tablets are expected to lead the BTS pack, and it is these types of higher priced items that will likely drive BTS/BTC spending to higher levels. We know for certain many families have selected to home-school and are dealing with some aspect of hybrid or enhanced virtual learning – so this really shouldn’t come as a big surprise. Unfortunately, with so many other unknowns – I think the harsh reality is that it will be hard for consumers to justify spending in the other more traditional categories when things could literally change overnight.
Drenik: Neil, you’ve been working with customer data for years. What are you seeing with regards to purchases customers have put off, and how do you anticipate things will be going forward? Do you expect consumers to defer any of their big purchases?
Neil Schwartz: We are seeing BTS/BTC households put off some spending across a variety of categories, some in what I would call impulse categories like dining out and entertainment. Other categories that require a great deal more planning like taking a family vacation require more planning and can also compromise household budgets during uncertain times. Uncertainty is the enemy of consumer spending in many ways. It’s also the enemy for investors, although you wouldn’t know it as it seems like the stock market makes new highs almost every day. That’s a discussion for another time. More and more consumers of back to school and college age kids are deferring some big-ticket purchases like cars to the tune of 12%Y/Y. On the other side of that, RV’s and Campers are becoming more desirable for families with school age children as a new way to travel in our Covid 19 environment.
Drenik: Let’s switch gears for a minute. The data is showing us that consumers are likely going to be spending less – should we also anticipate that how they shop in this new day will be different as well?
Schwartz: While we have spent a great deal of time talking about who and what, no discussion of BTS/BTC shopping can leave out the where. We are seeing what I might call a tectonic shift away from shopping malls and other retail outlets where social distancing and shopping can take longer than customers might feel comfortable with. The other big tectonic shift is the accelerated growth of online shopping. Based on what we are seeing so far, consumers have adopted online shopping for everything from groceries, health and beauty care to TV’s, sports equipment and just about every retail category that comes to mind. BOPIS and every variation of omni channel shopping that you can think of are propelling those retailers that were able to scale up quickly and meet the needs of consumers are positioned well. And let’s not forget about the 10,000 lb online Gorilla…Amazon. What’s interesting though is that in the Prosper data we saw a spike in Amazon Prime memberships at the beginning of the pandemic has now tailed off a great deal. As other retailers have been able to fill consumer’s needs, they have been able to grab back some market share.
Drenik: With the importance of online – and a shift away from traditional malls, there are bound to be winners and losers through all of this. I know your report covers this in detail. Are there any insights you are willing to share?
Schwartz: I don’t want to give-a-way too much from getting the report …but I mentioned earlier Amazon has been able to take advantage of the situation but that does not mean others are not going to come out winners in BTS/BTC and then be prepared to lean into the holidays. One of the retailers that really jumped out at me was Nike and Foot Locker on the Footwear side. Consumers are not in the mood to experiment at the moment and when it comes to athletic and sports footwear, Nike is at the top of the food chain. You go into a Nike retail outlet or Adidas store and you know exactly what you’re coming out with. Plus, they both have highly developed online shopping experiences. When it comes to kids clothing Walmart, Target, Kohl’s and yes Amazon have the biggest variances when you look at the BTS/BTC shopper versus the market in general.
Drenik: Thank you Aimee and Neil for your analysis. The full report “Back to School with a COVID State of Mind” is available for purchase through Prosper Insights & Analytics. For more information, email [email protected].
Complimentary Coronavirus/Covid-19 findings are available at AWS Data Exchange. To learn more, click here: Strategic Insights: Coronavirus Covid-19 Consumer
To read my previous Forbes articles on changing consumer behavior, predictive analytics, machine learning, data privacy and more, please click here.
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