Fulton Mall shopping gap empty street

If confidence is key, what will it take to unlock the downward spiral of the current consumer psyche caused by the coronavirus pandemic?

In the latest monthly recurring report released by Refinitiv, a provider of global financial market data and infrastructure, and Ipsos, a Paris-based market research and consulting firm, it’s clear that consumer confidence is shaped and defined by a number of varied driving forces.

“Even though the coronavirus outbreak continues across the country, consumers and business owners are beginning to see glimmers of hope as some states and communities begin to open their economies again. However, there is still a lot of concern around the long-term outlook and potential fear around resurgence of future waves of the virus,” said Chris Jackson, senior vice president, Public Affairs, Ipsos.

For its monthly survey, Ipsos reaches out to citizens in 24 countries to “gain insight into the current state of their country’s economy for a total global perspective,” which is collected via online polls for several consumer-centric indices, according to the firm. Its data output is based on a randomly selected representative sample each month of primary consumers aged 18 to 64 in the U.S. and Canada, and aged 16 to 62 in other countries, Refinitiv said.

According to Refinitiv’s Ipsos Primary Consumer Sentiment Index for May, which provides insight into how consumers feel about current and future economic conditions, intentions and expectations, the outlook is dreary: Numbers fell 2.4 percent from last month and had a 17.2 percent decline year-over-year.

The PCSI measures 11 key conditions: Multiline Retail; Leisure Products; Textiles, Apparel and Luxury Goods; Hotels, Restaurants and Leisure; Personal Products; Specialty Retail; Internet and Catalogue Retail; Distributors; Food and Staples Retailing; Household Products, and Household Durables. The firm has gathered monthly U.S.-based data since 2002.

“Declines in the overall PCSI are on a smaller scale than they were last month. This is driven by an increase in the Expectations Index, but drops in Current, Investment and Jobs indices. The most significant declines are seen across the Current and Jobs indices, both of which are down roughly five points,” authors of the report explained.

More specifically, its U.S. Retail and Restaurant Q1 2020 earnings index is expected to show a 31.7 percent decline. And, it’s projected to drop further in the second quarter, to a startlingly 65.5 percent decrease.

Pedestrians wearing protective face masks cross an intersection on a shopping street in the Causeway Bay district in Hong Kong, China, 05 May 2020, amid the ongoing coronavirus COVID-19 pandemic. From 08 May Hong Kong people will be allowed to go out in groups of up to eight, as a limit on the size of gatherings in public places is relaxed amid a dwindling number of new COVID-19 cases in the city.Coronavirus situation in Hong Kong, China - 05 May 2020

Pedestrians wearing protective face masks cross an intersection on a shopping street in the Causeway Bay district in Hong Kong.  JEROME FAVRE/EPA-EFE/Shutterstock

So when everything’s going down, down, down — how can consumers course correct?

“Consumers are hopeful, [but] there remains some concern about how many people will be willing to take part in the economy for fear of contracting the virus. Meanwhile, business owners and consumers are learning to adapt to a new normal,” Jackson said.

That’s why it stands out that only increase this month is in the aforementioned Expectations Index, up 7.8 points. In spite of it all, the American consumer is confident anyway.

Jharonne Martis, director of Consumer Research, Refinitiv, told WWD, “The issue is that when there’s a hard stop on the economy, it’s difficult to get it restarted, especially since consumer spending had been the biggest bright spot in the economy over the past five years.

“The one economic indicator that consumers understand very well is unemployment. At this stage, every consumer knows a relative or friend that has lost their job and are in fear that they might lose their employment in the near future, too. Therefore, people are holding back on spending. When you combine that with the fear of getting the virus, it is evident that mall traffic might weaken further in the upcoming quarters. Thus, making the department stores and other mall apparel retailers the most vulnerable with the highest probability risk of default.”

But as U.S. consumer shopping patterns continue to be affected by the pandemic, in some parts of the world, a relative sense of normalcy is emerging. “As stores have already reopened in Asia, Nike and others tells us that store traffic is at same levels seen prior to the COVID-19 outbreak. Despite this, shoppers don’t feel comfortable buying in stores and are going online to finalize their purchase.”

And if it wasn’t clear pre-pandemic, the importance of a “solid” omnichannel experience is no longer debatable, especially as shoppers gravitate online and use mobile devices for curbside pickup and deliveries, Martis noted.

“Recently, Best Buy said online sales grew over 250 percent over last year, and half of the orders were for deliveries and the other half for curbside pickup, thus underlining the importance of an omnichannel experience going forward. This is a necessity for retailers to succeed. And, the bulk of retailers have not mastered this, putting them at a disadvantage during COVID-19.”

“For the past five years, Target used to beat earnings expectations, but its stock plummeted as the retailer indicated that it would invest in necessary technology for the omnichannel experience — which is a high expense. Today, that investment is paying off — Target is one of the few retailers expected to post a robust 7.7 percent Q1 strong same-store sales.”

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