A panel of industry advisors from The NPD Group discussed how their categories met the challenges of the pandemic and what the home + housewares industry can learn from their experiences. They included: Steve Baker, Technology; Joe Derochowski, Home; Larissa Jensen, Beauty; David Portalatin, Food; and Matt Powell, Sports. Peter Giannetti of IHA was moderator.
A common thread of their discussion was how what happens in one industry has a trickle-down effect to other industries and what will happen when consumers’ lives “return to normal.”
An increase in vaccination percentages and a decrease in Covid case counts is expected to lead to people gradually becoming more comfortable with activities outside the home and returning to restaurants. However, Portalatin cautioned, the restaurant industry may not get back to pre-pandemic levels. In the five years before the pandemic, typical customer traffic in restaurants was flat, declining 3/10% over the five years, he said.
Comparing the explosion of buy online/pick up in-store (BOPUS) at retail to the restaurant industry, he said “it’s called ‘take out’ and has been around forever. We’ve just found a frictionless, convenient, high-customer satisfaction way to do it with digital technology.”
In the five years before the pandemic, digital orders from a smartphone or website grew at a compounded rate of 23% a year. The pandemic took that behavior and fast-forwarded it five years to 500 million orders annually, Portalatin said. “The fastest-growing behavior is not digitally ordering for delivery but digitally ordering for take-out. Restauranteurs should be looking at how to unlock a digitally enabled take-out business.”
The pandemic affected the sporting goods industry on two fronts: scholastic sports and personal health and wellness. Scholastic sports were decimated during the pandemic, Powell said, with most schools in the country eliminating sports in the spring with few returning in the fall. Powell said the business should make a comeback if schools, as expected, should return to full capacity by mid-May.
Under Covid, consumers renewed their interest and commitment to live a healthy lifestyle, and activities for which they could go outside and try to stay fit while remaining socially distant thrived, Powell said. Running, hiking, footwear, golf and racquet sports grew. When gyms closed early during the pandemic, home fitness soared, he said, with exercise equipment advancing by 80% and bicycle business increasing by more than 50%.
The home gym is directly relevant to the home kitchen experience, Portalatin added. The consumer has built tremendous capacity to do many things at home, and even with a reduction in Covid cases, consumers will continue to work out at home because they bought fitness equipment, he said.
Derochowski said when kids’ activities start to come back, it will create pressure around the preparation and cooking phase that wasn’t there during the pandemic. “Ideally we want to keep the same behaviors as during the pandemic, because we were eating better, eating as a family more and things of that nature,” he said.
And while consumers may not apply makeup to eat at home, they are likely to when returning to restaurants and other social engagements, beauty advisor Jensen said. Beauty is a usage occasion category, especially makeup, the largest sub-category. Beauty was hit hard, she said, but small things like treating oneself in the stay-at-home economy thrived.
One area was “Spa at Home,” which includes candles, body care and skincare devices such as toners and lasers. Closing of hair and nail salons brought increases in sales of hair color and nail care products. However, these are small categories of the market and were not enough to offset losses, including a 19% decline in prestige beauty, Jensen said.
Retailers stepped up beauty promotion significantly during the pandemic, according to Jensen. In the U.S., 40% of prestige beauty brands we “on sale.” In 2019, 63% of weeks saw beauty promotions in the U.S. In 2020, there was only a week that didn’t have promotions, she said.
Consumers have gravitated throughout the pandemic to direct-to-consumer e-commerce platforms. Why consumers shop a retailer versus direct-to-consumer varies by industry. Beauty consumers shop across brands, and the assortment differentiates retail from direct to consumer, Jensen said. “At the end of the day, beauty is very experiential, and brick and mortar is very important,” she said.
In technology, Baker said retailers continue to hold an advantage in their ability to enable consumers to compare across brands and multiple products, while a direct-to-consumer brand website offers limited choices.
In the home + housewares sector, Derochowski said, retailers should continue to optimize their customer-service appeal to consumers seeking validation that they are making the right purchase. “Retailers can provide many brands and give confidence in what you’re purchasing,” he said.
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