Dive Brief:

• Beauty and apparel sales are in for a rebound post-pandemic, according to research last week from Wells Fargo analysts led by Ike Boruchow and Tom Nikic.

• But retailers selling home goods and athleisure can rest easy knowing that demand for their goods won't disappear, according to the survey of 1,000 U.S. consumers regarding their shopping plans for the second half of the year and beyond.

• The initial surge in e-commerce sales has tempered somewhat, but once the dust has settled, online penetration of retail sales are set to land 540 basis points above pre-pandemic levels, Wells Fargo predicts.

Dive Insight:

Most U.S. consumers have scaled back spending during the pandemic, partially because of economic uncertainties and partially because they didn't have much to do.

In the past year, 64% of Wells Fargo survey respondents spent less, 23% spent the same and 13% spent more. "Interestingly, of the 64% who spent less in 2020, nearly 40% plan to return to 'normal' levels post-pandemic and 27% plan to spend more initially (which bodes well for sales recapture this year), while 34% expect to keep their spending depressed," Boruchow and Nikic said.

Some categories can anticipate more of a rebound than others. Masks may have undermined the importance of beauty items to many consumers, but that and apparel sales are primed to bounce back in the second half of the year, as the pandemic eases, and then once it's over, according to Wells Fargo's research. In their survey, 40% of respondents said they'll return to buying makeup and other beauty items and 37% said they'll buy new outfits for going out, according to an emailed client note. 

Still there's also evidence that the enthusiasm around home goods and athleisure apparel will linger. Though they may be returning to the office for work and otherwise getting out, people don't appear to be finished fixing up — or lounging around — their homes. Last year's most popular categories were athletic and athleisure apparel (55% of respondents), home (43%) and athletic shoes (35%), per Wells Fargo.

A third of those surveyed said that home will remain a top spending category for them as the pandemic eases, and 31% said they'll be buying athleisure, the most frequently purchased category last year. 

"This appears to reflect the potential for permanent behavioral shifts — though consumers are unlikely to spend as much time in athleisure or at home as in 2020, they may continue to update their closets with more comfortable clothing and invest in their home due to ongoing (and likely permanent) work-from-home dynamics,"  the analysts said.

Their research suggests that even those categories may continue to grow. In all, retailers like Ulta, Urban Outfitters, Ralph Lauren and Gap Inc. will reap the benefits, as will off-pricers to a lesser extent, including Burlington, Ross and TJX Cos., Wells Fargo said.

E-commerce gets a bump

Online sales soared during the pandemic as many consumers avoided stores even when they were allowed back open. Retailers of all sizes and types entered or expanded the online channel.

That has simmered down somewhat in recent months as vaccinations roll out, but some amount of the switch will be permanent, according to Wells Fargo. Basically, many hold-outs — consumers who did little to no shopping online before the pandemic — will stick with it at least to some extent.

There's been a marked shift in apparel, a category long thought to be resistant to online sales because of the difficulty of adequately presenting attributes like size, color, drape, texture and fit. Before the pandemic, the average shopper did just under a third of their apparel or footwear shopping online, and that spiked to 51% last year, according to the report. Wells Fargo's data suggests that, among those surveyed, that will settle to about 37% "once life returns to normal."

Extrapolating their own findings to Euromonitor data, which pegs 2019's online penetration of apparel and footwear sales at 25% and 2020's online penetration of the category at 38%, Wells Fargo finds that it could settle at 30% this year.

Some of those who did little to no online shopping for their clothing have now become comfortable doing so. "This means that the consumers who did the least amount of spending online pre-pandemic were the most likely to see a permanent shift in behavior post-pandemic," Well Fargo said.