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Apparel’s New Normal? More Consumers Shop Online but Spend Less

Apparel retail has taken some major hits throughout the COVID-19 pandemic, particularly during April when apparel sales declined 16.4 percent, but as more consumers have gotten acclimated to shopping online, hordes have flocked to the channel.

In the week of May 3-10, apparel retailers  generated an average weekly revenue growth rate that was 69 percent higher than the same week in 2019, according to data from Quantum Metric, an SaaS platform that delivers behavioral and predictive analytics for major global retailers.

The number of orders grew at an even higher rate (79 percent), while average order value actually decreased 60 percent. This suggests that while more shoppers overall are buying apparel online, many of them are still holding back on how much they’re willing to spend.

These smaller cart sizes correlate directly to the dismal economy picture brought on by coronavirus disruption, according to Quantum Metric chief marketing officer Efrat Ravid. “When you don’t go out of your house, you have different needs. You see no one is going to the office and no one is going to parties or fancy weddings, and all those expensive purchases are going down,” Ravid said. “It’s clear that there’s economic pressure and people are spending less because of that. We can see as people lose their jobs, they probably buy less.”

The good news for the e-commerce side of apparel aside from the total revenue and order gains is that on average, weekly conversion rates are trending 29 percent higher versus the same week last year.

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“Our retail customers that were prepared for Cyber Monday and Black Friday knew how to handle this volume,” Ravid told Sourcing Journal. “And now we’ve seen the conversion rate go up since then. I think the success comes from retailers already really focusing on digital. Maybe we’ll [see] layoffs everywhere else but not in digital. Actually, in digital, we’re seeing companies hire new employees, buying new software and products in order to improve their conversions. It’s really the priority of the company to work on the conversions.”

But as apparel retailers start to open up stores again, they’re going to have to adjust to the larger contingency of consumers who are willing to do more shopping online, and find ways to adapt their new in-store experience to an even more digitally savvy audience.

“I’m talking to a lot of chief data officers and chief information officers and one of them at an athletic company mentioned that the biggest issue is that now that they don’t have the stores and the big experiences, how do they link the physical product within the store to the digital experience?” Ravid said. “This was always a big issue. When you go to a store, you feel it, you smell it, you hear the music and you see the people that try to sell to you the way it’s presented. How can you present this in a digital and smart way?”

Ravid notes that retailers are going to continue to fight that challenge over the course of the customer journey, even as stores open up, especially as more shoppers are likely going to feel more comfortable turning to e-commerce for future apparel purchases.

And just as retailers expect more consumers to shop online, they also must elevate their online experience in kind. Long load times or clunky checkout experiences are two issues that often plague retailers, and these issues can become more convoluted as retailers figure out which tech partners fit them best.

“It’s very easy to come to a website and for something to not work, because the control that you have over your website is not as big as you think,” Ravid said. “There are so many API codes and browsers to be compatible with, and people can come from any WiFi experience. You need as much visibility of the customer as you can see, to determine where they are experiencing friction and how to prioritize the issues to the individual customer to ensure they have a really smooth experience.”

Other recent studies have been bullish on apparel sales growth as shoppers adapt to the pandemic. Fintech service provider ViaBill, which partners with retailers to offer no-interest buy now pay later shopping experiences for consumers, calculated a 106 percent increase in fashion sales, well ahead of the 50 percent increase in computer and accessories sales and 34 percent increase in the health and wellness category.

Klarna’s most recent demographic data shows that from May 3 through May 9, its Gen Z and millennial app users increased their share of spending on apparel, footwear and accessories for the fourth week in a row, while Gen Xers shelled at 10 percent more.

Klarna app-enabled sales at stores that sell women’s accessories grew by 12 percent week over week in the week ended May 9, suggesting that female shoppers are looking to freshen their wardrobes with seasonal accessories as more states and municipalities lift stay-at-home orders.