Tracking Retail’s Rapid Recovery

As we look ahead to the second half of 2021, today’s briefing takes a closer look at trends impacting the retail industry’s ongoing recovery. 

Last week, Adobe Analytics reported U.S. online retail sales during Amazon Prime Day surpassed the record levels of ecommerce spending seen during last year’s Cyber Monday, topping $11 billion (a figure that’s 6.1 percent higher than Amazon Prime Day 2020 sales in October 2020). 

Related: Target, Walmart, Kohl’s, and resale website ThredUp also held competing deals during last week’s two-day Amazon Prime Day event. 

Amazon reports that Prime members purchased more than 250 million items worldwide during Amazon Prime Day 2021, as members “shopped and saved” more than any previous Prime Day. Some of the best-selling categories included tools, beauty, nutrition, baby care, electronics, apparel, and household products. Top-selling products worldwide were the iRobot Roomba 692 Robot Vacuum, Keurig K-Slim Coffee Maker, Apple Cider Vinegar Gummy Vitamins by Goli Nutrition, and Crest 3D White Professional Effects Whitestrips.

Prime members also geared up for back-to-school, with a record number of backpacks, laptops, notebooks, and calculators, and most notably, 220,000 Crayola products purchased during Prime Day. And in a nod toward online shopping’s evolution into a more engaging experience, Amazon reports that tens of millions of customers viewed Prime Day product demos and try-on hauls via Amazon Live livestreams with Amazon creators throughout Prime Day.

As Americans begin venturing out and preparing for the return to the office or classrooms this fall, apparel sales have skyrocketed. According to retail tracking by NPD Group, apparel sales are up 46 percent this year compared to the same period in 2020 and up seven percent compared to 2019.

NPD Group cites three factors that have contributed to rising retail sales: 

America’s reopening and the return to dining out, office work, and community events

A new fashion cycle of looser fitting denim

People who no longer fit into old clothes 

Bank of America (BoA) reports that spending on clothing is 35 percent higher than it was two years ago as the return to work clothing boom gets underway. Yahoo Finance notes that the Amplify Online Retail ETF, which tracks the performance of popular apparel brands like Lands’ End, is up over the past month, alongside department stores Macy’s and Dillard’s. For department stores specifically, BoA reports that the two-year growth rate has surged 25 percentage points. 

Related: Nike reported that sales more than doubled to a record $5.38 billion last quarter as footwear and apparel sales in North America were reportedly up 29 percent on a two-year basis, according to CNBC. On its earnings call, Nike predicted it will pass $50 billion in revenue this fiscal year for the first time due to its surging ecommerce business and new membership model. 

According to a recent NPD consumer survey, “nearly 40 percent of women and 30 percent of men said they are wearing a new size,” whether it be due to “home gym investments” or “snacking due to stress amid the pandemic.” The earliest indicators of a retail comeback were rising swimwear and denim sales this spring, with swim increasing 19 percent compared to 2019 and jean sales also rising over ten percent compared to 2019 data. 

JPMorgan Chase recently reported that Amazon is on track to “overtake Walmart as the largest U.S. retailer” as soon as 2022. Similarly, eMarketer forecasts Amazon is expected to rake in more than 40 percent of all ecommerce sales in the U.S. by the end of 2021. While Walmart’s U.S. ecommerce growth has more than doubled in the past two years (and the company has accumulated roughly eight million paid Walmart+ members), eMarketer forecasts it will take second place behind Amazon in ecommerce sales, capturing seven percent, followed by eBay, Apple, and Home Depot. 

Analysts, including FTI Consulting, predict that the current retail boom may subside after June 2021 as consumers opt to spend more on experiences and services than retail goods. 

While the slight retail sales dip evidenced this in May, most analysts agree that online’s share of sales will continue to rise. FTI anticipates that online retail sales will grow 13.5 percent more this year than 2020 to reach $865 billion. eMarketer’s estimate of ecommerce sales is slightly over FTI’s, predicting that ecommerce will account for 15.3 percent of total retail sales in 2021, only to jump to 23.5 percent by 2025. 

Chart by Axios

Additionally, Jeffries analyst Randal Konik cited in a note to clients on consumer confidence that consumer appetite for new apparel purchases will persist into the fall and back-to-school shopping season this August, especially as families take advantage of the expanded child tax credits and more schools unveil plans for returning to in-person learning.