New York Times READ

On Eve of the Holiday Shopping Season, Consumers are Buzzing About Retail

Published by Engagement Labs November 25, 2020


Word of mouth about retail and apparel is on the rise as the nation heads into the all-important holiday shopping season – Americans are engaging in 4% more offline WOM conversations about brands in this category over the past 8 weeks versus the same time a year earlier. Further, buzz about children’s products is up 7%, more than any other category measured by Engagement Labs. This compares favorably to an overall decline in brand WOM of -2%.

This should bring good cheer to the nation’s retailers, and lends support to the just released National Retail Federation’s forecast that holiday sales will grow between 3.5% and 5.2%. “Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend,” NRF Chief Economist Jack Kleinhenz said. “Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago."

But not all categories of retail & apparel are poised for growth, if WOM is an indicator as we have demonstrated it is.

The biggest gainers are discount stores, which are garnering 57.4m more word of mouth impressions each week now versus a year ago – an increase of 10%. Athletic brands and stores are up 34.3m (+21%), and home centers and hardware stores are up 17m (+8%). This all reflects a desire to spend smartly despite difficult economic circumstances for many Americans, as well as continued investments in physical fitness at home, and home renovations and enhancements.

Department stores, in contrast, are seeing significantly less WOM than a year ago, with 17m fewer word of mouth impressions this year versus last, or a 21.8% decline.

Change in Year Over Year Word of Mouth Impressions by Retail/Apparel Subcategories

More specifically, the 10 brands seeing the greatest year-over-year growth come from a diverse set of brands including some who’s word of mouth has grown 100% year over year. The list includes athletic shoe and clothing giants Nike, whose word of mouth has grown by 15.7m weekly WOM impressions over a year ago, or 19%, and Adidas (+9.9m, or 30%); discount retailers Walmart (+13,8m or 4.6%), Costco (+12.3m or 72%) and Target; HomeGoods (+10.4m or 100%) and Ashley Furniture (+10m or +60%) in the home goods category, Ace Hardware (+8.7m or 49%) and Home Depot (+8.4m or +12%) for the DIY’ers; and Shein, the fast fashion ecommerce platform (+6m from only 500k weekly WOM impressions a year ago).

Top Ten:  Change in Year Over Year Word of Mouth Impressions by Retail/Apparel Brand

In the children’s category WOM has grown by 7% overall, more than any other category (as noted above).  This is consistent with the Black Friday forecast just released by Publicis entitled, “Toys Set the Tone This Cyber Weekend.” Publicis notes, “there are a number of reasons toy deals are rising to the top. Families may want to give them a little something extra in light of smaller holiday gatherings or are preparing for at-home family game nights, especially those in the northern hemisphere as winter approaches and outdoor activities decrease.”

The children’s brands showing the biggest gains are seen for Hasbro (+5.9m WOM impressions per week, or +183%), Gap Kids (+4m from only 600k a year ago), likely due to the success of their masks, Lego (+2m or +14%), and Baby Einstein (+2m or +70%).  


Despite Impressive Gains for Some, There are Sharp Declines for Others

The rising WOM tide in retail and apparel has not lifted all boats. As impressive as some of the gains have been both in absolute as well as a percentage gain basis, there are more than 35 brands in the category that have seen declines over last year. Leading the way is Forever 21, the fashion brand that is being shuttered (-9.2m WOM impressions versus a year ago, or -55%). This is followed by Macy’s (-5.6m or -27%), Best Buy (-5.4m or -23%), Marshalls (-4.7m or 59%), and Kohl’s (-4.5m or -14%).

Bottom Ten:  Change in Year Over Year Word of Mouth Impressions by Retail/Apparel Brand

“We know this holiday season will be unlike any other,” NRF President and CEO Matthew Shay said as he released his forecast. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year. We expect a strong finish to the holiday season.” With WOM trends as a leading indicator, there is sure to be gifts a plenty in the stockings for many of these retailers, but sadly also coal for others unless there is a holiday miracle that will help them quickly turn things around.

Wishing you good cheer and a safe holiday season.

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