Creative Channel Retail Insights
Over the past 8 weeks as business and retail have come to a near standstill, consumers have been begun to stockpile. Obvious signs are overloaded grocery carts, the run on toilet paper and other essentials; however, a less obvious sign is consumers are also saving cash at a nearly exponential rate from past trends (see chart below).
Seasonally Adjusted Personal Savings Rate. (Source US Bureau of Economic Analysis fred.stlouisfed.org)
A part of this is driven by a sense of uncertainty, however there’s also been a fundamental shift in activities. Consumers are spending less due to stay-at-home orders, and as a result, dining and going out, travel, vacations and related expenditures have decreased. As consumers try to navigate the challenges of being forced to remain home and unable to spend on experiences, this net increase in the savings rate is driving more indulgent purchases. Shoppers are spending on ‘things’: both premium and value products are thriving right now as people are looking to make life at home easier and give themselves a gift.
But that’s not all. Consumers recognize that supply chains and online shopping are impacted, and retail stores also cannot be relied on to meet their previous just-in-time purchasing habits, so they’re beginning to plan out their purchases more. Shoppers have begun to expect delays in shipping and potential out-of-stocks, so they are adjusting their behavior and buying ahead of time. We saw this trend in an early spike for Mother’s Day. Typically, Mother’s Day purchases peak on the weekend of Mother’s Day, and begin to surge only a few days before, however this year the surge began 3-4 weeks earlier than the prior year.
Looking forward, as retail stores begin to open-up, we are anticipating that Holiday Shopping will begin with the Back-to-School season in late summer. Given the current state, paired with current and historical data, we believe people are going to make their purchases early this year, to ensure that they are not locked out of their purchases and gifts they have in mind this holiday season.
We welcome your perspective! How prepared are you for this as you look at your plans for the rest of 2020?