The back half of March was a brutal time for retailers in the apparel industry, a new survey has found—but there were still bright spots to be found among smaller, digitally native brands.
Of 94 apparel retail and e-commerce respondents, 49 percent said their business was “significantly below plan” in terms of sales made between March 15 and March 28, according to CommerceNext’s second such survey diagnosing the impact of COVID-19 on retail and e-commerce.
Commerce Next, which hosts an annual conference on digital commerce, said the survey painted a picture of a “very challenging environment” for retailers at present.
“Sales continue to decline overall,” the company said. “From Feb. 1 through March 14, only 20 percent of merchants were behind their e-commerce revenue goals. In the last two weeks of March, that percentage jumped to 50 percent.”
Almost half (41 percent) admitted to reducing headcount as a cost-reduction measure in the face of forced store closures. However, only 57 percent said they had seen a shift to online sales in the latter half of March, although this was up from 35 percent in the first half of March.
Marketing spend has also been largely reduced, with declines in basically every channel including influencers and social media. Most retailers (67 percent) said they had decreased their media spending overall.
Some smaller brands in the direct-to-consumer space have been able to grow during this time, however, and the survey found that 27 percent of the retailers that said they were seeing sales above-plan were increasing their marketing spend.
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Most of this growth in spending was concentrated in social media and paid search ads as these companies try to take advantage of increased white space in the market.
“As consumer behavior and sales move more online, so are the paid search and paid social budgets of those merchants trending above revenue plans,” CommerceNext said. “The majority of retailers, however, are maintaining or cutting marketing spend across the board.”
Though traffic continues to suffer, Commerce Next pointed to the fact that many in the industry have begun to aid with production of medical-grade personal protective equipment (PPE) and masks as proof the industry is working to adapt to changing conditions.
In the apparel and accessories industry, 56 percent of respondents said they have adjusted operations to help manufacture PPE compared to 43 percent of the overall market.
Many companies have also invested further in their e-commerce and fulfillment channels as a way to spur growth during the coronavirus pandemic. In terms of fulfillment, 24 percent of those that responded increased spending during the period, although 28 percent also reported lower budgets for fulfillment logistics.
Phone support investment has seen broad acceptance, with 34 percent reporting increased spending, while only 14 percent decreased expenses related to call centers and over-the-phone customer service.
Many brands and retailers (45 percent) have increased spending for return service flexibility while just 4 percent lowered their returns budget.
“Merchants are making the operational adjustments needed to accommodate the new patterns of consumer behavior,” CommerceNext said. “Many are focusing on enhancing their customer experiences, increasing phone customer service support and adding flexibility to their return policies.”
Still, there is a long way to go before the return of normality, and a tough second quarter looms for most businesses.
Of those that responded, 89 percent said they have adjusted their Q2 forecasts and 42 percent said they were forced to significantly reduce their quarterly expectations.