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AUTHOR|Lara Ewen
Source: www.retaildive.com, April 2020

After stocking up on essentials, consumers have begun targeted discretionary spending. What have they deemed worth buying during a quarantine?

When the COVID-19 pandemic first forced Americans to stay home, shopping was all about panic. Consumers who were used to purchasing for severe weather events such as snowstorms and hurricanes worried that supply chains would shut down, so they stockpiled essential goods such as toilet paper and hand sanitizer.

However, as the quarantine dragged on, it appeared that supply chains were not as impacted as had been previously anticipated. That’s when shopping habits began to shift from hoarding essentials to buying things to make life more, well, livable.

Marshal Cohen, chief industry analyst, retail, at The NPD Group, a global market research firm, said that by mid-April, hoarding categories had, for the most part, slowed down to single-digit increases. “Freezers are now full and pantries are now full, and [consumers] have bought more than they needed in a year,” he said.

According to NPD Group Point-of-Sale Retail Tracking Service NPD Universe, office supplies, including janitorial/breakroom products such as paper towels, hand sanitizers and wipes, etc., were up only +1% as of April 4, 2020, compared to the prior week.

Once shoppers realized they’d be able to continue shopping during the pandemic, their panic shopping ebbed. “Some of the hoarding stabilized,” said Katie Thomas, who leads the Global Consumer Institute at Kearney, a strategy and management consulting firm. “People [originally] had about a four week supply a few weeks ago, and now it’s about two.”

Of course, what consumers consider essential is subjective. Alcohol and firearms sales were up as of early April, as well as sporting goods, home office, and pet supplies. The definition of what constitutes positive sales trends has shifted as most stores across the U.S. remain temporarily shuttered and shoppers shift their focus to curbside pickup and e-commerce.

“What we’ve seen starting March 20th is a move from a ‘stock up’ position to whatever the next trend is,” said Andy Mantis, chief business officer at 1010reveal, which is part of 1010data, a provider of data and analytical intelligence. “But outside of what people are stocking up on, like staples, almost every category is down by as much as 70% or 80%.”

1010data reported that by April 2020, travel was down 95% year-on-year (YoY), and luxury sales had also declined sharply. For the week ending March 12 they were down only 8% from January and February levels, but by April 10 they had fallen 71% lower than January/February levels. The apparel sector also went down 76% YoY, both online and in store, and accessories were 84% down, according to analysts with 1010data.

Eating as entertainment

Just as telling as the declines is what’s up. One of the biggest positive changes has come in the kitchen sector. The lockdown meant that between 35% and 40% of consumers began eating home-cooked meals for the first time, according to Chris Ventry, vice president in the consumer and retail practice of SSA & Company, a global management consultant focused on strategy execution. For these new home cooks, cooking became about entertainment as much as sustenance.

Cohen said nonessential kitchenware, such as sandwich makers and bread makers, sold particularly well as the quarantine went on. NPD Universe reported that small appliances were up +7% week over week for the week ending April 4, 2020. “It’s because we’re looking to make our homes entertaining,” he said. “We’re buying components that have to do with cooking, but not pots and pans.” Other items in that category included rice cookers, vacuum sealers to contain leftovers, and soda makers such as Soda Stream.

As spring eased toward summer, cooking at home also began to include gardening. “We see continued growth in gardening,” said Ventry. “[Spring] is obviously the most important time and season for garden centers.” Growing herbs, he said, played well with the home cooking trend, too. “We saw similar trends from 2008 to 2010, during the recession,” Ventry said.

People were also eating to feel better. “You’re seeing an increase in vitamins and supplements for immune support, and also CBD for anxiety,” said Thomas. “But also Oreos and Cheetos. People want comfort food.”

Toys and games

Eating isn’t the only way to pass time during a lockdown. Traditional entertainment options also rose. “You can only watch so much television,” said Cohen. Non-digital books sales, especially in the religion, cooking, and DIY categories, were on the rise, prompting some stores to rehire previously laid-off staff to process the influx of online orders.  “And hardcover is outpacing some digital downloads,” Cohen said.

Puzzles, which had been trending pre-COVID-19, became even more popular, and board games — especially old-school versions — also started trending. “People are turning back to traditional games, and even wood puzzles,” said Ventry. “I don’t know if that’s falling into the category of educating because kids are at home, or just as a general passing of time.”

Hobbies, including crafting, exercise, and even bird watching, also got a boost, said Ventry. “Michael’s has increased their employee base, and we’re seeing Hobby Lobby refusing to close, which does show a consumer resilience in the craft market.” He added that ping pong paddles were up 89%, and bird feeders, bird food, and bird treats were up 91% as of early April.

Pets

Many quarantined and locked down consumers were also looking to bring new furry friends home. “People who didn’t previously have pets are fostering and adopting,” said Ventry. As a result, he said, pet care company Chewy’s numbers are up. “They’re having a 35% increase in the first quarter, with a mixture of existing customers panic buying in the beginning, and a new customer base with a new pet,” said Ventry. “Historically in a recession, people cut back on themselves before they cut back on their pets.”

Pet supplies were starting to level off as of mid-April, however. According to 1010data, overall pet supply sales for the week ending March 15 were 23% above January and February levels, but by April 1 they had fallen to 27% lower than January and February levels, as people worked through their March stockpiling. “At its peak [on March 18], pet supply spending was up 47% YoY, but store visits were only 8% up,” said Inna Kuznetsova, interim CEO of 1010data. “After that, there was a decline in spending and store visits, and spending fell to only 24% up YoY, which means there was a stock up and then only a modest increase.”

Beauty and apparel

The beauty category, which was otherwise soft, was buoyed by salon closures and the increase of Zoom office meetings and Facetime cocktail hours. “One might say there’s a less of a need for some beauty products, because we’re going out less,” said Ventry. “But Zoom necessitates proper clothing attire and accessories and makeup. And with salons closed, people will be doing more transitional maintenance at home.”

According to a CNN report that included Nielsen data, hair clipper sales were up 166%, and hair dye sales were up 23%. In fact, by mid-April, Walmart announced that panic purchases of haircolor were notably on the rise. Still, beauty overall was down. “Beauty is down 50% YoY, but it’s not as bad as some categories,” said Mantis.

Also selling well is anything having to do with protection or coziness. “Scarves are selling, and bandanas, because we’re telling people to wear masks,” said Cohen. “And sleepwear is the one category in apparel that’s been affected the least. It’s only 30% down YoY.”

What’s next

As the weather warms, there may be an increased focus on yard-based buying. “If we’re still quarantined by summer, in-home activities will turn to outdoor games and playground sets for the people who can afford it,” said Thomas. “And if this ends tomorrow, a lot of people want to travel, even if it’s just to visit their friends and family.”

Finally, the return to comfort may continue long after COVID-19 is eradicated. “In thinking about consumer value, prior to COVID-19, you were seeing mission-driven and sustainable shopping,” said Thomas. “Now it’s about taking comfort and addressing boredom. It’s about more human reasons, and more practical reasons, related to cooking at home, working from home, and teaching kids at home.” It’s also about trying to be happy. “You’re seeing so much negativity in the news,” said Thomas. “But there’s a degree where people are trying to have fun too. At least until the next bout of anxiety.”