July 21, 2024

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Consumer sales are flatlining, but UBS says it will drive a revival of brick-and-mortar stores as shoppers want to ‘try before they buy’

2 min read

The number of people buying online is falling—but bad news for consumer spending could lead to a comeback for brick and mortar stores thanks to their singular advantage, according to analysts at UBS.

Through a thousand-person survey of consumers in the U.S., the bank found that the percentage of people shopping online for things like clothing and apparel fell 3% year-over-year and was down compared to each of the last four years. The survey results are a stark change from the common belief, and the bank’s own previous estimate, that online sales would continue to take market share from clothing and apparel retailers that primarily sell their products at physical stores.

Now, the bank is changing its tune. In a Thursday note, UBS analysts claimed that slowing online sales could be a boon for retailers that primarily sell in brick and mortar stores. 

“The market continues to see online migration as a potentially major disruptive force to Softline companies since most of them derive a majority of their sales from brick & mortar stores. We think slowing online sales growth rates over the [next 12 months] will change this narrative,” the analysts wrote.

The about-face from UBS comes after consumer spending barely budged from April to May with a 0.1% increase month-over-month, according to the Commerce Department. In May, in-store sales of clothing and accessories rose 0.9%, while overall online sales rose 0.8%. 

Fueling UBS’s prediction is evidence that consumers are once again recognizing the one clear advantage of brick and mortar clothing and apparel stores: they let customers “try before they buy.”

The bank found that 47% of consumers, 3% more than last year, said the reason they weren’t shopping online was because they wanted to try on the products before buying. Even when consumers start looking for a product online, 28% of the time they buy the product in a physical store, UBS found. 

“Online retailers have not found a…

Marco Quiroz-Gutierrez

2024-06-22 13:53:00

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