While apparel sales have taken a major hit during the COVID-19 pandemic as shoppers primarily shift to essential retailers for their shopping needs, it appears the category may be primed for a bounce back.
As many as 49 percent of apparel retailers now report that their e-commerce sales came in ahead of plan from March 29 to April 11, well more than the 28 percent that reported as much between March 15 and March 28, according to data from CommerceNext.
However, as many as 26 percent of apparel retailers remain so concerned about their present financial situation that they question their ability to stay in business into the fourth quarter.
If these retailers are looking for federal assistance, they don’t have much confidence that it will be of significant help. According to a Digital Commerce 360 survey, 40 percent of retailers believe the federal government’s $2.2 trillion COVID-19 stimulus package, known as the CARES Act, will have little impact on their business, while 23 percent expect no impact at all.
The CARES Act created a $349 billion Paycheck Protection Program aimed at keeping workers at small businesses on payroll for eight weeks. The forgivable loan initiative ran out of money last week amid overwhelming demand of applicants, causing many small businesses and lawmakers alike to clamor for more funding.
On Tuesday, the Senate reached a $484 billion deal to replenish the program. The deal would allocate $320 billion more for the Paycheck Protection Program, $60 billion of which would be set aside for small lenders. It would also offer $75 billion for hospitals and $25 billion for coronavirus testing, which is widely needed to give consumers the confidence to resume public life.
The Senate could vote on legislation as soon as 4 p.m. ET on Tuesday, and will need unanimous support to pass it. The House could approve the bill as early as Thursday.
The National Retail Federation applauded the Senate’s move to pump more money into the small business pipeline.
“The CARES Act was an important first step but funding for the Paycheck Protection Program has already been exhausted and additional relief is essential to keeping employees of small retailers on the payroll and contributing to the economy until we can get through this challenge,” said NRF president and CEO Matthew Shay, describing retail as battling “catastrophic hardships from COVID-19.”
“This assistance is too important to be given out on a first-come, first-served basis and limited to those who were the quickest to file their applications,” he added. “This measure will ensure that those who need assistance the most will receive it. It should be passed and signed into law before this health crisis turns into any more of an economic crisis than it already is.”
Despite industry concerns related to the stimulus bill and overall economic headwinds, e-commerce executives across sizes and categories are expressing “cautious optimism,” with 43 percent now citing online sales that are significantly ahead of plan. E-commerce traffic is trending up as well, with 31 percent of retailers reporting significantly higher traffic compared to the weeks prior—above the 23 percent that said so in the previous study.
Just 33 percent of apparel retailers say e-commerce sales are “significantly below plan,” much improved from the 49 percent that said so in CommerceNext’s prior poll. This is the digital event’s third community-wide survey tracking the impact of COVID-19 within the past month, all of which have benchmarked sales and e-commerce traffic results in the outbreak’s wake.
Apparel still suffers from excess inventory, with just 28 percent not reporting any overstocks compared to 46 percent of everyone else. As expected, 42 percent of apparel retailers are still relying on running deep promotions, while some are also starting to use overstock channels and offer ship-from-store and curbside pickup to help sell excess inventory.
As many as 57 percent of apparel retailers deal with fulfillment delays, which is the biggest business disruption merchants have had to handle during the pandemic. Apparel retailers have actually fared much better than the rest of their retail peers when it comes to keeping the creative process in line—only 33 percent have experienced creative production interruptions, compared to 49 percent of non-apparel retailers.
Temporary warehouse closures (32 percent) and temporary suspended fulfillment (20 percent) are other bumps in the road for apparel retailers, while 15 percent said they’ve experienced no interruptions.
Eighty-seven percent of all respondents indicated uncertainty about consumer confidence in the fourth quarter, while 49 percent had concerns that continued social distancing measures in this period would weaken demand. This data aligns with numbers from Digital Commerce 360’s survey, in which 97 percent of retailers report declining consumer confidence as shoppers find themselves in a waiting game to purchase.
While consumers are playing the waiting game, it unfortunately feels like too many retailers are doing that as well instead of proactively find ways to mitigate current issues. Digital Commerce 360 found that more than half (57 percent) of retailers still are only taking some action, or no action at all, to curbing the effects of COVID-19.
Retail supply chains are taking a major hit amid pandemic disruption, with challenges ranging from delivery delays (22 percent) and cancellations stemming from inventory shortages (15 percent) to more products on backorder (14 percent), according to Digital Commerce 360.
Of those taking action within the supply chain, retailers are prioritizing supplier communication (53 percent) and coordination for risk mitigation (51 percent), while fewer are creating contingency plans (25 percent) or revisiting their supply chain outlook altogether (21 percent), the firm said.
CommerceNext plans to detail the full results of its recent survey in a webinar on April 22, featuring Sucharita Kodali, vice president and principal analyst at Forrester Research.