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06/02/2021

NPD Group: Four trends to watch in the coming months

Marianne Wilson
Editor-in-Chief
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Spending on products related to travel and other experiences is poised for its comeback.

That’s according to The NPD Group, which identified the return of experiential spending as one of four major trends to watch in the coming year. The company noted that the retail industry is doing better than retailers expected this time last year, with discretionary U.S. retail sales revenue rising 17% from January 1 through May 8, 2021, and even more strikingly, retail sales up 18% over 2019. 

A recent “Future of Style” event, hosted by The NPD group, explored the major trends affecting global industries, including beauty, accessories, apparel, footwear and sports. Following are four important overarching retail trends to watch in the coming months.

• Experiential spending returns
With U.S. and global vaccination rates on the rise, consumers will once again start spending on travel, dining out and other experiences. This socialization shift will create more movement in products related to emerging needs. As consumer behavior starts to bounce back, leaders in the retail industry are looking beyond what happened last year to determine the behaviors that will change, as well as those that could remain in force for months, or even years, into the future.

“Some experiential spending is already coming back strong, as consumers do more, dress up more, place more emphasis on appearance and health, and start to spend more on tangible products related to travel and other experiences,” said Marshal Cohen, chief retail industry advisor for NPD. “However, as this pent-up demand works itself out in the coming months, we can also expect those rising sales to throttle back a bit in apparel, footwear, and other categories.”

• The power of the pandemic “lifestyle pillars”
Purchasing related to home-based work, education, fitness, entertaining, and healthy home all ramped up mightily last year, and the continuation of these lifestyle pillars continues to propel retail growth upward. Even so, these pandemic pillars will eventually start to moderate, as restrictions ease and consumers revive more of their pre-pandemic activities.

“Sports equipment, home products, consumer technology, and toys enjoyed strong sales last year,” Cohen said. “While some categories, like activewear, will continue to receive a complementary boost from the continuation of the pandemic lifestyle pillars and renewed experiential spending, sleepwear and others will not.”

• Retail’s cadence is shifting
Consumers used to plan their shopping carefully weeks or even months ahead of time, but that forward-looking focus shifted appreciably last year. Due to all the uncertainty surrounding the pandemic, along with the convenience of one- and two-day shipping, curbside pick-up, and other convenient options, the retail cadence became much more immediate.

“Consumers began to shop mainly for their immediate situations, rather than thinking about what they might need down the road or for the season ahead,” Cohen said. “We can expect some of that behavior to continue, even as more stores reopen and consumers get comfortable shopping in-person again, and retailers will need to adjust their seasonal planning in order to win the purchase.”

“Shoppers have deferred purchases for many reasons,” added Matt Powell, senior sports industry advisor for NPD. “There was a recent surge in softlines sales when kids went back to school this spring in some areas of the country. This is one example when the shift to buying when it’s needed could disrupt the traditional back-to-school shopping season.”

• Fast-forward for digital transformation
Over the past few years, a big story in retail was the steady digital transformation of many sectors of the retail market. However, after the pandemic hit, the size of e-commerce growth for some industries leapt forward by three years while still leaving plenty of room to grow. 

Although beauty, fragrance, and apparel, still benefit more from in-store traffic, due to the need to see and try on products, housewares, sports equipment, and other retail categories will increasingly reap benefits from the consumer’s accelerated migration to shopping online.

“When it comes to shopping, it’s apparent now that the consumer does not recognize any lines of demarcation at all,” Powell said. “Shopping is all one thing to them now, no matter where it happens. The faster retailers can recognize and accept that premise, the better – and more profitable – they will become.”