After a soft June where revenues were flat compared to last year (despite rising prices), the Belardi Wong survey of Direct to Consumer (DTC) sales showed a surprising upswing in July 2023 with e-commerce up +4 percent year-over-year. Apparel led the uptick with a +10 percent increase while shoes and accessories were up +8 percent. Home décor, which my correspondent said has had a tough 2023 overall, was down -5 percent.
The Belardi Wong survey points out that the customer day-in and day-out shopping activity had not been keeping pace with levels of the past. The company observed that sales have been concentrated around promotional holidays, as even the affluent consumer is now waiting for added incentives to buy. For instance, we see that the survey showed that Prime Day drove significant strength in apparel, which is consistent with what BW has seen all year.
It must be noted that the Belardi Wong survey covers brands that serve mostly affluent consumers, so that this survey shows that even these consumers were shopping more aggressively. Certainly, the tax-free days offered in seventeen States, that began in July and spread into August, may have been an incentive for consumers to buy for both the back-to-school and fall season period.
Brick and mortar stores like Macy’s, Nordstrom, Target
TGT
WMT
But, there are a few bright spots in recent weeks. One revolves around children’s apparel. Kids are not going back to school in last year’s clothes. Many have outworn and outgrown their apparel, and while they may get fewer new outfits than in the past, they still need some new clothes.
In their recent comments about business results, the management of TJX stores indicated that home merchandise and home décor was picking up in July, an indication that people are still shopping to fix up their homes and make them more beautiful if they can do it at a great price.
One hopes that the recent upswing sticks and some normalcy is coming back. The consumer spending this year has been erratic and remains an enigma. As a result, one can expect strong promotions for the fall and Holiday seasons. At the same time, manufacturers are likely to still carefully manage their production schedules in anticipation of likely early customer shopping through fall and into holiday. This will distort the buying pattern for the year and complicate any late re-order planning
POSTSCRIPT: It is important to note that the affluent consumer seems to be more frugal this year. Belardi Wong has a national staff working with over 400 DTC clients As a result, the agency has a good overview of the industry.
Read the full article here