4 Retail Categories that Grew Despite Pandemic Disruption
The massive acceleration of eCommerce activity brought about by the global pandemic is common knowledge by now. More precisely, certain consumer verticals did exceptionally well during the first months of the pandemic. Shopping habits shifted significantly as customers stayed home. The public stopped shopping at local stores and eating at restaurants. Stay-at-home orders changed how people dressed, exercised and relaxed. What people chose to spend money on reflected those changes. Here are four consumer industries that boomed as a result.
Fast Fashion and Apparel Resale
Even with entire populations on lockdown and unable to visit stores, several fashion brands and platforms have experienced significant growth since the start of the pandemic.Sales growth for online fashion resellers has been particularly strong, notes Quartz fashion reporter Marc Bain. Zalando, a European online fashion brand, saw sales grow by 34% in the first quarter since the pandemic started. Sales also rose for U.K.-based Asos, which experienced a 10% growth in the four months through June 30, 2020.
Fashion resale platforms have also proved popular, report CNBC’s Eric Rosenbaum and Susan Caminiti. According to its 2020 Resale Report, consignment platform ThredUp, where customers buy and sell over 45,000 brands, had a record-breaking month in May 2020, with shoppers spending 2.2 million hours browsing the site, Rosenbaum and Caminiti write.
Of course, not every brand has been that fortunate, write CNBC reporters Melissa Repko and Lauren Thomas. Tailored Brands, a professional menswear company, for instance, is seeking Chapter 11 protection, as are Lucky Brand and True Religion. Athleisure leader Lululemon, on the other hand, saw online sales grow by 157%, while Nike grew women’s apparel sales by 200% in the quarter ending August 31, Repko and Thomas write.
Frugality and comfort are the new black, says Vogue Business’s Editor-at-Large Christina Binkley. “Nordstrom’s homepage guides shoppers to a ‘Home is where the cosy is’ section that lists knit joggers, scented candles and Aesop hand balm,” she writes.“Neiman Marcus is promoting skincare, loungewear, and accent pillows on its homepage. Discounts are rife, stripped across the tops of the websites of Macy’s and Bloomingdale’s. Bergdorf Goodman is pushing a ‘State of calm’ campaign as well as 40 per cent discounts.”
With people working from home and not going out as much, many are investing in their homes and home offices instead of travel and entertainment, Retail Dive’s Caroline Jansen notes.
The shift in spending has benefited several brands in particular, she notes. Wayfair, Overstock and At Home have all grown over the past six months. Wayfair posted a profit for the first time since 2014, and Overstock saw “retail-specific net revenue” rise by over 100%, Jansen writes. Even At Home, which typically relies on physical stores to bring in revenue, was able to pivot to a buy online, pickup in store model and increase sales by more than 50%.
The hardware and home improvement sectors have experienced some of the biggest year-over-year growth in orders, according to research by Bazaarvoice. Hardware tops the list with orders up by 134%, while the home and garden sector experienced a 75% growth in order count.
Home Depot delivered a very strong third-quarter report while Lowes recorded a 30.4% rise in third-quarter sales, says Phil Wahba, Senior Writer at Fortune Magazine. Both are increasing their product offering to keep sales strong post-pandemic.
Of course, many of these are one-time purchases, not recurring purchases. People are only going to splurge once on their home offices, for example. That means likely there will not be an opportunity to sell someone a second desk. This is not to say home improvement spending will falter. There is at least one area of home improvement that Sophie King at Mention Me says will remain strong: plants.
“Working from home has increased the desire to bring the outdoors in, driving more referrals for plant delivery brands as people spruce up their homes with a leafy Kentia Palm or soothing Peace Lily,” she writes. “Meanwhile, those with the luxury of outdoor space are investing in outside plants and tools to transform their garden into a true sanctuary – a trend set to strengthen as the weather warms.”
Health and Fitness
Bike manufacturers and resellers have probably been some of the biggest surprise beneficiaries of the pandemic. “People are taking to two wheels in droves, both as a way to exercise while obeying social distancing rules and to avoid crowded public transport,” writes Johnny Wood, Senior Writer at Formative Content. The U.K.’s Association of Cycle Traders has reported strong sales and growth is similar across Europe in cities like Berlin that are converting roads into bike-only lanes.
Indoor cycling was in similarly high demand, writes Laura Noonan, U.S. Banking Editor at Financial Times. “Between March and September, Peloton, best known for its spinning bikes, almost trebled the number of people who pay for its digital fitness classes but don’t buy equipment. Turbo trainers allowing you to cycle indoors on an outdoor bike were so in demand that by April they were sold out across much of Europe.”
The growth was not limited to cycling or to Europe. Anyone in the U.S. who wanted to buy workout equipment during the pandemic had a tough time finding any, notes Jia Wertz, CEO of women’s apparel company Studio 15. There has been a 600% increase in the sale of gym equipment, she notes, with several companies marking up items to profit from the increase in demand.
In addition to physical equipment, digital fitness and wellness programs, such as virtual classes, has experienced exponential growth. Research by CB Insights shows more than 80% of Mindbody users were using the platform’s fitness streaming services in April 2020, up from 7% in 2019.
Downloads of health and fitness apps also increased sharply — by 47% in Q2 of 2020. Health and fitness company Daily Burn with multi-platform workout videos saw memberships grow by 268% year-on-year, and audio-based workout app Aaptiv saw traffic double and engagement triple between March and April 2020, according to CB Insights.
With so much enforced indoor time during lockdowns, people started playing more video games. Video games grew so much in popularity that revenues exceeded sports and film combined, reports MarketWatch’s Wallace Witkowski. IDC data pegged total global video game revenue in 2020 at $179.7 billion. Global film industry revenue was $100 billion in 2019 and North American sports was expected to bring in over $75 billion in 2020.
Both sides of the gaming market — both hardware and software — grew, writes Matt Perez at Forbes. More than $10 billion was spent on physical, digital and subscription content between April and June 2020, according to research by the NPD Group. One of the most popular games, “Animal Crossing: New Horizons,” which launched in March 2020, sold 22.4 million copies during this quarter. At the same time, sales of the Playstation 4, Xbox One and Nintendo Switch grew by at least 46% each.
Further proof of the surging popularity of video games comes from Roblox filing for an IPO. Roblox hosts millions of user-generated games and claims to be used by two-thirds of U.S. children aged nine to 12.
“The size of the offering was listed at $1 billion in a U.S. Securities and Exchange Commission filing,” write Crystal Tse and Olga Kharif at Fortune. It comes on the back of an 82% increase in daily active users during the pandemic and an expansion by the company to become a social platform where users can hang out virtually with friends.
It should not be surprising that these were among the best-performing retail categories in 2020. Fashion, health and fitness, and home improvement thrive when people have the time and energy to spend on themselves and their homes. This is why major athleisure wear brands like Nike and Lululemon saw sales climb by more than 100% while sales for gym equipment and indoor bikes rose sharply.
Ultimately, these numbers tell a story about people looking to better themselves and their environments during a pandemic.
Gaming follows a similar logical path. With socialization options curtailed — whether through the closure of businesses or stricter capacity limits in public spaces — people turned to the best remaining available options to have fun and to interact. That is the role gaming plays in many people’s lives.
As the pandemic continues, brands in these verticals should look to build long-term relationships with this new wave of first-time customers.