The number of online purchases is falling – but bad news for consumer spending could lead to a comeback for stationary shops This is due to their unique advantage, say analysts at UBS.
Through a survey of a thousand consumers in the USA, the bank found that the percentage of People who shop online for things like clothing and apparel fell 3% year-on-year and were down from the previous four years. The survey results represent a significant departure from the general assumption and the bank’s previous assessment that online sales would continue to take market share from clothing and apparel retailers that primarily sell their products in brick-and-mortar stores.
Now the bank is changing its tone. In a statement published on Thursday, UBS analysts claimed that Slowdown in online sales could be a boon for retailers who primarily sell in brick-and-mortar stores.
“The market continues to see online migration as a potentially major disruptive force for softline companies, as most of them generate a large portion of their sales in brick-and-mortar stores. We believe that online sales growth rates will slow down over the next few years. [next 12 months] will change that narrative,” the analysts wrote.
UBS’s turnaround comes after consumer spending hardly moved from April to May This represents an increase of 0.1% from the previous month, according to the Commerce Department. In May, store sales of clothing and accessories rose 0.9%, while overall online sales rose 0.8%.
UBS’s prediction is supported by evidence that consumers are once again recognizing the clear advantage of brick-and-mortar clothing stores: they offer customers the opportunity to “try on” products before they buy.
The bank found that 47 percent of consumers — up 3 percent from the previous year — said they wanted to try products on before buying them as a reason for not shopping online. Even when consumers search for a product online, they buy it in a physical store 28 percent of the time, UBS found.
“Online retailers have not yet found a way to overcome this objection to online shopping,” the analysts wrote. “We believe this is a key reason why online penetration will not continue to increase.”
In fact, the disconnect between goods sold online and the real world remains a challenge for online retailers in the form of a growing flood of returns This costs the seller money, creates logistical problems and ends up in landfills.
Some brick-and-mortar retailers are already experiencing a recovery, confirming the UBS analysts’ forecast. Abercrombie & Fitch reported that its best first quarter ever last month Net sales increased 22% compared to the same period last year. The company’s share growth surpassed Nvidiatoday the most valuable company in the world in 2023, with an increase of 374% compared to the previous year.
The trend of consumers shopping in physical stores more often than online could also help boost shares of another mall favorite. American Eagle Outfittersand Boot Barn because investors had undervalued them due to the perceived threat of online sales, which may be less threatening than expected, the analysts wrote.