U.S. consumers to spend less on apparel over next 2 weeks: McKinsey
While American consumers remain optimistic about the economy amid the Covid-19 crisis, consumers expect to spend more only on must-have categories and less on apparel in the coming weeks, according to a survey by McKinsey & Co.
Based on U.S. survey data collected on March 16 and 17, consumers expect to spend 50 percent less than usual on apparel over the next two weeks, as well as 53 percent less on jewelry, 55 percent less on accessories and 47 percent less on footwear.
In fact, the only category consumers expect to spend more on is groceries.
Still, positive online trends can be expected for home essentials and entertainment including household goods like personal hygiene products and entertainment products like books and magazines.
The change in consumer behaviour is inline with a change in household income as over one-third of survey respondents received a reduced income during the last two weeks and 39 percent expect the same to happen over the next two.
Consequently, 44 percent of respondents say they will be reducing household spending over the next couple of weeks.
Both consumers and businesses have started to feel the financial impact of the Covid-19 pandemic.
German brand Hugo Boss withdrew its outlook for the 2020 financial year last week, after saying it was “impossible to quantify” the financial impact of the coronavirus on its business. A large portion of its own retail stores have closed temporarily, as well as many stockists in Europe and North America.
Similarly, American cosmetics conglomerate Coty Inc. reported on Friday that it expects to see a 20 percent decline in sales in the third quarter, resulting in a “meaningful impact on profit”, as Covid-19 continues to cause disruption around the globe.
And consumers don’t believe the end is near. About 70 percent of respondents said they believe their finances will be impacted by more than two months due to the current Covid-19 situation.
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