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How Has Covid Shifted Shopper Spending?

The pandemic has had manifold impacts on the ways that consumers interact with retail. During the early days, many pulled back on spending—but after a few months at home, some began once again to shell out for fashion.

The trajectory of shopper spending isn’t cut and dry, however. New research illuminates the nuances of shopper behavior during the pandemic, and the trends that experts believe stand to impact retail moving forward.

Shoppers are spending more on average

E-commerce has been among the biggest beneficiaries of the Covid crisis. And as shoppers turned to the web for more of their needs, they began spending more on average each time they checked out, according to NPD, whose Checkout service gathered data from more than 130,000 customers to help retailers track and improve performance.

The pandemic has led to an increase in the amount spent on each shopping occasion, it said, with the average amount spent on a purchase reaching $34 in March of 2020, and remaining at or above that amount through this July. The increase is partially attributable to the higher average selling prices (ASPs) for goods found online, which has caused the amount spent on each web transaction to see a consistent lift. But the shift has also extended to brick-and-mortar retail, it added.

The research firm believes the behavior change can be attributed to a trend toward “stock-up purchasing.”

“Fewer shopping trips to limit in-person contact at retail stores, combined with supply-chain challenges making fewer products available, means consumers are more willing to spend more now to get the products they need,” Marshal Cohen, retail chief industry advisor for NPD, said. “This dynamic alters the traditional cadence of product seasonality and creates less price sensitivity.”

In fact, for each of the 12 months since March 2020, shoppers have spent between 13-29 percent more than they did in the same month the year prior. Those increased spending levels have held up into this spring and summer, NPD said.

Grocery stores, drug stores, hardware stores, warehouse clubs like Costco, and big-box stores such as Target and Walmart have reaped the benefits of free-spending shoppers, both online and in-store. Consumers spent an average of 20 percent more per shopping trip at these channels through July of this year compared to 2019 levels. But online pure-players have emerged as the biggest winners overall, with transactions averaging 49 percent higher than in 2019.

“Leading into the holiday shopping season, we can expect to see consumers spending more for better products, with fewer items under the tree,” Cohen added, noting that the evolution of the pandemic lifestyle is influencing what shoppers are buying this season. Namely, they’re spending more on fewer, higher quality and full-priced goods. “Layer on reduced in-store shopping frequency, and the continued strength of online shopping, and the critical role of impulse shopping will remain muffled.”

Boomers now leading the charge

Additional NPD data shows that Baby Boomers’ spending on fashion increased by 28 percent between January and July of this year, as compared with pre-pandemic levels. While most generations have spent more on apparel amid the Covid crisis, Boomers have outpaced millennials five-fold, and are spending over twice as fast as Gen Z shoppers in 2021.

In the past year, Boomers have been shelling out on a “mixed bag” of categories, NPD director of market insights for apparel, Kristen Classi-Zummo, wrote. The most popular selections have been comfort clothing, sportswear, sleepwear and basics, “indicating that they are looking to refresh their entire wardrobes,” she said.

While 82 percent of Boomers’ apparel purchases were made at brick-and-mortar retail in 2019, they have been forced to adopt different habits amid retail shutdowns. They embraced e-commerce as a means of procuring both household necessities and discretionary items, and while physical retail still makes up the majority of their spending as of July 2021, the web likely has a permanent hold on their wallets. In the past 12 months, Boomers were responsible for $1 out of every $5 spent online, and their digital spending on apparel outpaced any other generation.

“Brands and retailers love to focus on Millennials and Gen Z vying for their share of wallet, but Boomers should not be overlooked,” Classi-Zummo said, noting that fashion defined this generation’s beliefs, ideas, hopes and dreams as they came up during the ‘60s and ‘70s. “Maybe this is part of the reason why Boomers like my dad hold tightly to their fashionable roots and, amidst a challenging time in our history, maintain a steadfast focus on fashion.”

Luxury shoppers are going the resale route

While shoppers seem to be less price sensitive, they’re also showing a bit more shrewdness when it comes to luxury buys, the The RealReal said.

The premium and luxury resale marketplace’s latest shopper insights study, which polled 1,011 respondents who shopped high-end brands over the past 12 months, showed that the secondhand luxury space has attracted more new buyers since 2019 than in all other years combined.

While luxury has remained a compelling category throughout the pandemic, shoppers aren’t willing to drop their hard earned dimes just anywhere. Traditional retail channels are quickly falling out of favor with this consumer group, with outlets down 10 percentage points from 2019 and department stores seeing a 7 percent decline during the same period. Instead, 48 percent of luxury shoppers said they were “very” or “extremely” likely to buy these products used, up 6 percent from 2019.

“As the luxury resale market continues to evolve, its growth is significantly outpacing the primary market,” The RealReal chief marketing officer, Orr Shakked, said. However, not all resale marketplaces have hit the sweet spot with shoppers, he pointed out.

“There is a distinct divide in resale, with just five marketplaces, including The RealReal, having meaningful aided awareness,” he added. The company has seen a 14-percent awareness increase since 2019, “a more than 50 percent greater increase than any of the other 24 resale brands researched,” Shakked said. Only four other companies—eBay, Poshmark, ThredUp and Sotheby’s—contributed to building on luxury resale awareness at a rate above 30 percent.

While the appetite for luxury resale has risen across product categories, jewelry and watches have seen the greatest uptick in interest, at over 12 percent since 2019. Women’s apparel has grown by 9 percent in the same period, while men’s apparel and shoes have seen a notable 11-percent uptick.

Men’s luxury fashion represents “the greatest growth opportunity” for luxury resale, The RealReal analysts opined. The platform’s data showed that male shoppers are more than 3X more likely than women to exclusively buy luxury, and more than 1.5X more likely to consistently clean out their closets, making room for new duds. While men represent a smaller consumer pool than women, 12 percent reported consigning for the first time since the pandemic’s onset, compared with 5 percent of new male consignors in 2019.

When it comes to shopper reasoning behind making more secondhand luxury purchases, value rose to the top, with 86 percent of the consumer vote. Shoppers also cited the selection of brands and merchandise on luxury resale platforms (62 percent), sustainability (43 percent, up 13 points from 2019) and extending the lifecycle of luxury items (40 percent, a 9-percent increase from 2019) as their reasons for buying used.

“Resale has seen record growth over the past two years, but only 24 percent of luxury shoppers currently purchase pre-owned pieces,” said The RealReal founder and CEO Julie Wainwright. Therein lies a massive opportunity for luxury resale players, she opined. “Bringing more new shoppers and consignors into the circular economy is essential to creating a more sustainable future for fashion.”

“It’s critical we continue raising awareness of the negative environmental impact of fashion and resale as a solution every one of us can adopt,” she added.

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