Easter is just around the corner, but the mood and environment surrounding the holiday in 2020 are in stark contrast to typical years due to the coronavirus pandemic. As a result, US consumers are set to slash their spending on Easter this year. However, in this report, we note the pockets of opportunity that are available to retailers—not simply to drive sales but to build stronger bonds with consumers. Discretionary consumer spending looks on course to take a big hit in an environment where many in the workforce are losing jobs, being furloughed or being forced to take a pay cut—and where most nonessential stores are shut. Service industries are likely to see the biggest impact, as many US state lockdowns are currently banning residents from dining out or taking part in leisure activities. According to data from the University of Michigan, the consumer sentiment index in the US dropped to 89.1 in March from 101.0 in February, in what was the fourth-largest decline in almost 50 years. We estimate that US retail will see Easter-related spending of about $12.5–13.7 billion this year, versus the $18.1 billion that the NRF estimated for last year—representing a 25–31% decline and driven by expected very deep declines in nonfood categories such as apparel, flowers and decorations. Most Consumers Expect To Spend Less this Easter According to a recent Coresight Research survey of US consumers, conducted on April 1, some 54% of respondents said that they are likely to spend less on Easter this year in comparison to last year’s holiday, and 37.5% stated that they will spend “much less” or stop spending entirely. Less than 3% of respondents said that they plan to spend more this year. [caption id="attachment_107339" align="aligncenter" width="700"] Base: US Internet users aged 18+
Source: Coresight Research[/caption]   Trends Leading Up to Easter Project a Bleak Outlook for Spending Our US consumer survey on the subject of the coronavirus outbreak last week brought out the following trends in the run up to Easter:

• Most consumers are very worried about the coronavirus.
• One in 10 respondents have lost their jobs.
• Half of consumers are now buying less.
• Shoppers are scaling back their apparel purchases.
• Half of consumers are spending more online than they used to.

The planned reduction in apparel spending represents a significant change in consumer behavior from last year, as clothing comprised the second most-shopped category after food in planned spending for Easter 2019. In addition to apparel, our survey found that the home and home improvement and electronics/appliances retail sectors are other discretionary categories likely to be severely impacted this year. What Retailers Can Do To Stimulate Demand: Offering Hope to Distressed Consumers Pivot to E-Commerce Retailers should be looking to make a quick pivot to e-commerce by focusing on quick and targeted communication to their customer base, in order to spur online purchases. This will be particularly important for discretionary categories such as apparel, in which most retailers have temporarily closed stores or are seeing scant traffic. As we get close to Easter, retailers must turn to quick-response, low-cost marketing channels to excite consumers and translate the holiday from a largely in-store shopping event to something more akin to an online shopping festival. Driving engagement and participation through social media channels will be key, and creating a fun online shopping experience through games or contests could drive sales. Retailers can recognize the Easter associations of spring and family time by conveying optimistic messages of renewal, reunion and rest—even if these are deferred until after the crisis is over. Consumers may be fatigued with bad news: Retailers should make efforts to show empathy and express hope through sensitive messaging during this period. Deferred Gifting Retailers can look to offer deferred gifting options to consumers, such as vouchers or credits for services, experiences or discretionary products. Shoppers can then cash in their vouchers or credits once life has returned to some form of normalcy. Like all gift card options, this type of strategy enables retailers to generate cash flow now on purchases that will be redeemed later. For consumers, deferred purchasing underscores a message of hope that everyday life will return, and with it, the opportunity to spend quality time with loved ones. Free Shipping Retailers could further show that they are empathic to consumers by making it as easy as possible for them to shop. Offering free shipping, or lowering the minimum-purchase requirements for shoppers to earn this benefit, is one means to enhance sales conversion rates. For instance, some retailers are offering removing the minimum order-value requirement for a limited period, while others are offering free curb-side pickup. Recreational Equipment Inc. is an example of a retailer that is currently offering free shipping for most orders. Extended Window for Returns Considering logistics further, retailers could also extend the window during which they accept product returns. Some of the retailers who have recently relaxed their returns policies on account of the current situation include Apple, American Eagle Outfitters, Bed Bath & Beyond, Best Buy, Gap Inc., H&M, Macy’s and Sephora. What We Think Retailers should look to promote themselves positively this Easter amid the coronavirus pandemic, such as by offering messages of hope and taking actions that show empathy with consumers. For example, they can recognize the challenges that consumers are facing and offer the promise of a better tomorrow with deferred-gifting options. However, with consumer sentiment currently at a significant low, we expect holiday-related spending this year to fall to about $12.5–13.7 billion, drastically short of the $18.1 billion that the NRF estimated for last year (representing a 25–31% decline).