Consumers Shopping Online Can Now Get More for Their Money
Consumers shopping online right now have more purchasing power than this time last year, according to a new study by Adobe. The company’s monthly Adobe Digital Economy Index (DEI) found that U.S. digital purchasing power grew by 4.1% year-over-year in April, meaning that shoppers can now get more for their money when buying online.
Specifically, consumers are able to buy for $100 what would have cost them $104 last year.
“Aggregate digital purchasing power continued to increase in April and we believe it is due to pronounced deflation in apparel,” said John Copeland, VP of marketing and customer insights at Adobe.
This deflation in apparel is a result of many brands and retailers introducing discounts or lowering standard prices on their products throughout April. The closure of physical retail stores has created a surplus of inventory that businesses need to shift, and reducing the price can help increase sales and generate momentum online.
The DEI found that online prices for apparel goods fell 12% in April, the largest drop during that period for the last five years. This month-over-month decrease from March to April was also four times greater than normal — the average monthly decline was 2.9% for the last five years.
This price drop has had a positive impact on sales, found the DEI, with online apparel sales increasing by 34%. Popular categories for e-commerce purchases included comfort items, with pajama sales up by 143%, while the summer staples, T-shirts and shorts, saw sales increase by 47% and 67%, respectively.
But while some shoppers may see this as an opportunity to buy higher-end goods that now seem more affordable, Adobe experts said that is unlikely because consumers must also contend with price hikes in other product categories.
“While purchase power has grown overall, thanks to deflation in apparel, there has also been inflation in other categories like electronics and groceries,” said Vivek Pandya, lead analyst for Adobe Digital Insights. “Some consumers may simply purchase the average-priced apparel goods they were going to buy anyway, in order to compensate for the elevated pricing they’re having to deal with in other categories.”
Usually it is expected that apparel prices will drop during May and June, as off-season clothing goes on clearance. However, it is not certain whether that decrease will take place in 2020, because many items may already be as discounted as retailers are prepared to go.