The widespread impact of the pandemic on consumer behavior, and consequently on retailers, is well-acknowledged by the industry. However, a new study by PayPal shows that despite this awareness, a large number of fashion companies have not taken actions to accommodate these changes. This could be particularly damaging for holiday sales, which many brands are relying on to make up revenue lost earlier in the year.
PayPal surveyed 1,000 U.S. PayPal e-commerce retailers: 200 in fashion, 200 in cosmetics and 600 across home goods, furniture, garden electronics and sport. The results showed that fashion brands consistently reported that they had been impacted by the pandemic and predicted more change, but few had turned these observations into action items.
One significant shift was consumer preferences for sustainable items over fast fashion. Nearly half (46%) of the fashion merchants surveyed reported that they had experienced a decrease in fast-fashion purchases. Yet 64% had made no additional commitments to introduce sustainability into their product lines; and 65% of fashion merchants declared that they had not introduced any new product in response to the pandemic.
Watch on FN
“Customers are aligning with retailers that reflect their core values, whether that’s along social or environmental lines,” said Greg Lisiewski, VP and GM of Global Pay Later Products at PayPal. “Brands that take strong stances will win more customers.”
This disconnect between problem observation and solution implementation could create issues for retailers, as consumers look for brands that meet their new expectations. Shoppers who are still uncomfortable shopping in-store, for instance, expect an enhanced online experience to replace this — but 47% of fashion merchants have not adapted their e-commerce offerings to the COVID-19 circumstances.
The holiday season is likely to exacerbate this imbalance. Of those surveyed, 47% of fashion retailers declared that they did not feel prepared for the holiday season. Fashion was also the category that was least likely to have taken proactive measures; PayPal found that 57% of fashion merchants are doing less than retailers in other categories to prepare for the holidays. Yet 22% also said that their future was “dependent on holiday sales this year.”
“This is no doubt a challenging time, but it is also full of opportunities if businesses are nimble and open to change,” said Lisiewski.
Lisiewski recommended that apparel companies follow the lead of cosmetics businesses, who consistently reported greater investments in new e-commerce ideas. Digital marketing was expanded by 32% of cosmetics brands, compared to 20% of fashion companies; 19% of beauty businesses launched an entirely new e-commerce platform, compared to just 9% of fashion counterparts.
PayPal also advocated for payment flexibility, reporting that nearly half of retailers agreed that “buy now, pay later” solutions are likely to reduce cart abandonment. Lisiewski called out the recent release of PayPal’s own Pay in 4 solution as an example of a payment solution that could help customers feel more in control of their purchasing. Nevertheless, only 24% of respondents said they are likely to offer such a solution for the holiday season.