Customers are spending on comfort as Covid-19 pandemic presses on
3 APRIL 2020
Retailers report sales spikes for product categories like pyjamas, at-home hobbies and household goods.
Retail traffic plummeted 98 per cent in the US as the Covid-19 pandemic has forced stores to close and customer buying patterns to shift.
Some product categories are seeing sales spike as customers, stuck at home, spend on comfort items like pyjamas, knitting sets and blankets.
Brands and retailers can reposition marketing messages to tap into this new customer demand.
Coronavirus is causing people to take up knitting.
We Are Knitters, a Madrid-based online seller of sustainable knitting supplies, has watched the sales of its beginner knitting kits spike successively as nation after nation has passed coronavirus shelter-in-place orders. It started in Italy, moved to Spain, then France, and is now sweeping the US and the UK, says Alberto Bravo, the company’s co-founder and creative director. We Are Knitters’ steady 10 per cent annual sales growth spiked to 235 per cent globally in March (270 per cent in the US), leading Bravo and his business partner to seek out new suppliers for their Peruvian wool as they eyed stocks in their warehouses in Munich and rural Delaware.
Stressed over the pandemic, travel bans and economic concerns, consumers have shifted spending behaviour overnight. Retail traffic plummeted 80 per cent in the US the third week of March, versus a year earlier, and dove 98 per cent in the fourth week, according to data from Prodco Analytics, Cowen & Co. and Bloomberg Intelligence. Cowen is predicting as much as a 100 per cent decrease in the final week of March, something retail executives are calling unprecedented, given the likelihood that traffic will remain low for weeks as shutdowns and social distancing orders continue. “At Bloomingdale’s, we have never experienced anything that puts everything we consider normal into question,” Tony Spring, chairman and chief executive of Bloomingdale’s, wrote in an email to customers on Tuesday.
This is creating a tricky moment for many brands. Some marketing messages that seemed smart a few weeks ago now sound tone-deaf. Companies are tiptoeing as they approach consumers. As the cultural mood has shifted, what sells has, too.
Nordstrom, based in Seattle, has begun to see sales of board games, blankets and home-wellness products increase as luxury goods have dropped off. Last week at Adore Me, a New York-based online lingerie company that competes with Victoria’s Secret, a soothing dark blue pyjama set called the Jayden was its bestselling item, replacing the company’s standard bestseller, the Gynger bra in crimson, which sports a huge bow over the bosom.
People are nesting, so those selling nesting supplies have much to gain, at least for the time being. This is true broadly for the economy: now that the initial hoarding of toilet paper and rice has subsided, food and garden suppliers are struggling to keep up with demand. Bytable Marketplace, an online purveyor of sustainable and humanely raised meats based in Colorado Springs, Colorado, shut down its digital operations temporarily to catch up and is now seeking to hire new employees to keep up with demand. Nurseries and seed companies are seeing an uptick in sales, as people plant the coronavirus equivalent of World War II “victory gardens”.
What does that mean for apparel companies? Many are aiming for the fashion equivalent of comfort food. Multi-brand retailers are highlighting more household and wellness products in place of fashion. Nordstrom’s homepage guides shoppers to a “Home is where the cosy is” section that lists knit joggers, scented candles and Aesop hand balm. Neiman Marcus is promoting skincare, loungewear, and accent pillows on its homepage. Discounts are rife, stripped across the tops of the websites of Macy’s and Bloomingdale’s. Bergdorf Goodman is pushing a “State of calm” campaign as well as 40 per cent discounts. Such pivots are more difficult for brands, unless they have a full supply of lifestyle goods to which they can turn. Tory Burch has been promoting Tory Sport activewear on her social channels and website, and has loungewear placed high on the landing page.
Executives at Adore Me, whose biggest investor is Mousse, the private investment vehicle of Chanel’s owning Wertheimer family, were recently unsure of how to address shoppers’ new sensitivities. They sent an email questioning consumers about their druthers: should the brand continue sending marketing emails, shift to discounts, or what?
“We got an enormous response, which tells you, just talk to your customer like a human,” says Ranjan Roy, the company’s head of content. The email received 2.5 times the normal response rate and received a 90 per cent positive sentiment rate, versus the company’s average 50 to 60 per cent.
“It just can’t be done like it has for the past 10 years,” Roy says. Adore sales, which are more than $100 million annually, he says, have dropped by a single-digit percentage. Upon closer look, performance by product category is telling: as Adore Me’s sleepwear sales rise, its swimwear sales — normally an important revenue stream in time for spring breaks — are diving. In fact, it’s almost a perfect reversal. This week one year ago, Adore Me’s swimwear sales amounted to 20 per cent of revenue, compared with only seven per cent this year. Sleepwear, on the other hand, has risen to 20 per cent from eight per cent for the same week a year ago, Roy says.
With its competitors’ stores shuttered, the company has seen an uptick in its shopping system where, like Stitch Fix, customers share their personal style preferences, then receive a box of items to select from, returning what they don’t want. Last year, the system amounted to 16 per cent of sales. In 2020, the goal was 25 per cent, but it has spiked to more than 50 per cent in recent weeks, Roy says.
At We Are Knitters, the response to coronavirus has been a textbook-ready look at consumers’ visceral response to being scared and shut in. At the same time that shoppers were racing into stores to buy food staples, the company began to see people stocking up on knitting supplies all around the world. “People were buying stash and skeins,” says Bravo, using knitting slang to refer to the stores of yarn supplies people keep at home, and the rolls of yarn themselves.
The company has seen an uptick in use of its video tutorials. And while it has resisted selling knitting patterns without kits until now, because they feel it’s off-brand from the kit experience, We Are Knitters tested selling patterns alone last week in response to customer requests. They sold more than 8,000 patterns in 48 hours, leading them to consider repeating the effort in a week or so in order to keep customers happy.
Across the US, where We Are Knitters sales have spiked 270 per cent, sales revenues have roughly followed the growth in coronavirus: California revenues are up 400 per cent, New York 280 per cent and Illinois 250 per cent.
Tellingly, beginners’ kits, which have fat needles, chunky yarn and simple patterns, have spiked by 750 per cent. What better time to take up knitting than during a home internment?
“Knitting is de-stressful,” says Bravo. He learned to knit when he and his business partner decided to launch the company after a 2010 visit to New York, where they saw DIY knitters in public places such as subways. His knitting hobby fell by the wayside as they built the business, but last week Bravo ordered yarn for a beanie from his company’s website. The office is closed so he couldn’t go pick one up. “It should be here next week,” he said. “I’m really into beanies.”