The New NormalAccelerating Consumer Trends in the Current & Post-COVID World

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The New NormalAccelerating Consumer Trends in the Current & Post-COVID World

COVID-19 ECONOMIC

IMPACTS

ONLINE SHOPPING

SURGE

CLOTHING TRENDS

COVID-19 ECONOMIC

IMPACTS

COVID-19 GLOBAL IMPACTEconomic impacts will be substantial

Source: IMF and World Economic forum

4.9% contraction projected

What level of impact will COVID-19 pandemic have on the global economy?

Forecast annual change in real GDP, issued in different months

+3.3%

-3.0% -4.9%January

April June

2020

*October next release date

COVID-19 & GLOBAL GDP FORECASTS

-5

-3

-1

1

3

5

7Percent change in global GDP, constant prices

significant downside risk to 2021 forecast if virus resurfaces

Source: IMF global GDP forecast

COVID-19 CONSUMER EFFECTSMany consumers across the globe are delaying purchases

% who plan to delay purchases until outbreak is over in their country

68%

65%U.S.

COVID-19 will have an impact on my household finances

68%Global

82%U.S. GLOBALSource: GWI Coronavirus Research July 2020

-20%

-15%

-10%

-5%

0%

5%

10%

Source: U.S. Bureau of Economic Analysis

Year-over-year change in overall consumer spending (goods and services), constant prices

Already worse than any point of the financial crisis

U.S. CONSUMER SPENDINGLargest drop on record

U.S. CONSUMER SPENDING: CLOTHING

4.6% 4.3%

-26.1%

-43.2%

-22.8%

-3.7% -3.6% -2.5%

-50

-40

-30

-20

-10

0

10

1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020

Source: U.S. Bureau of Economic Analysis

Year-over-year change in overall consumer spending for clothing, constant prices

CLOTHING PURCHASES AFFECTED: U.S.Consumer’s apparel spending will drop and take

time to recover

12

$326 $330 $305 $320 $337 $350

1.3%

4.9% 5.1% 3.8%

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

$500.0

2018 2019 2020 2021 2022 20230.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Apparel Sales (Billion USD) % growth YOY

-

29%of U.S. consumers say they are spending less on clothing than before COVID-19

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 9-11 and Euromonitor International and Bureau of Economics

-7.6%

ONLINE SHOPPING

SURGE

COVID-19 CONCERN: U.S.Concerns around COVID-19 remain high for consumers

Percentage of U.S. consumer who are very concerned about the COVID-19 pandemic:

March April September

58% 62% 58%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

COVID-19 CONSUMER EFFECTS: U.S.Consumer concern is very high, keeping

consumers out of physical stores

Have shopped for clothing in

physical stores in the last month

“It will take awhile before I am comfortable

shopping in a mall”

September survey finds consumers still staying home

65%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

17%

SHOPPING ONLINE: U.S.Consumers look online for shopping needs

Shopping online morein the last month

27%

29%

44%

42%

60%

I have access to moreproducts online

Online shopping is fun

I am online more oftennow

Many physical storesare closed

I feel it is safer

Reasons consumers shop online more:

44%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

RETAIL SALE BY CHANNEL: U.S.Retails Sales (by channel) year-over-year change

Date Total Retail Sales Online Sales

01/01/20 4.9% 8.3%02/01/20 4.5% 8.6%03/01/20 -5.6% 14.3%04/01/20 -19.9% 22.7%05/01/20 -5.6% 29.0%06/01/20 2.2% 23.7%07/01/20 2.4% 23.4%08/01/20 2.6% 22.4%

Source: Bureau of Economic Analysis

ONLINE SHOPPING IN COVID-19 ERA

$1,730$2,011

$2,310

$2,716

$3,036

$3,384

16.2% 14.9%17.6% 11.8% 11.6%

$1,500.0

$1,700.0

$1,900.0

$2,100.0

$2,300.0

$2,500.0

$2,700.0

$2,900.0

$3,100.0

$3,300.0

$3,500.0

2017 2018 2019 2020 2021 20220.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Digital Commerce (Billion USD) % growth YOYSource: Euromonitor

U.S.

What is your experience with shopping online for clothing?

31%

41%

28%

Never shopped this way

Always shopped this way

New Adopters

COVID-19 has forced new adoptions for online clothes shopping

ONLINE CLOTHING SHOPPING: U.S.

29%

51%

20%

New Adopters' breakdown by

age groups

16-24

25-44

45+

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

COMMON ONLINE ISSUES: U.S.

FIT54%

LOOK QUALITY SHIPPINGDon’t trust that I will receive what was ordered

51% Cost/time of shipping

61% Unsure of quality

65% How it will look on me

68% How it will fit

Percentage who say the following issues make online clothes shopping more challenging:

70% 70% 71%

66%

Those that don’t trust online shopping

77%

Source: Cotton Incorporated’s 2020 Sustainability and E-commerce Consumer Survey

INCREASING ONLINE CLOTHING SHOPPINGHow to make consumers feel more comfortable shopping for clothing online:

Easy and free returns, 45%

Offering a quality guarantee, 34%

Being able to try on clothing before deciding to purchase, 36%

Detailed fit information, 37%

Customer-submitted photos of people wearing the garment, 26%

Reviews from customers who have bought garment, 34%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

ONLINE PREFERENCES SHIFTINGConsumer shopping preferences

expected to shift even after COVID

% of consumers who will have a stronger preference for shopping for clothes online after the pandemic is gone and stores reopen

U.S.25%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 2 April

Equates to:82 million people

CLOTHES SHOPPING JOURNEY: U.S.In-store still dominates clothing purchase

preferences for U.S. consumers

23

46% 35% 64% 51%

BROWSING RESEARCH PURCHASING POST-PURCHASE

Percent of consumers who prefer to do the following in-store when shopping for clothing:

Source: Cotton Incorporated’s Lifestyle Monitor™ Survey

SHOPPING IN-STORES: U.S.Consumers want brands/retailers to take steps to protect them

24

Percentage of consumers who say the following would make them feel more comfortable shopping for clothing in physical stores:

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 2 April 27-30

25%

33%

38%

47%

48%

51%

51%

Shopping by appointment only

Increased sanitation

Extra distance between clothing racks

Customers wear masks

Hand sanitizer stations

Sales associates wear masks or distant

Limited occupancy

COVID-19 EFFECTS WILL PERSIST: U.S.This experience will change the

way consumers shop in the future

73%This experience will change my

way of shopping in the future

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 2 April

CLOTHING TRENDS

CLOTHING SHIFTS: U.S. Consumers wearing more casual and activewear clothing

38%39%

42%46%

49%50%

52%52%

Dress clothingCoats, jackets, outerwear

Clothing for workDenim Jeans

AthleisureLoungewearActivewear

T-shirts

Source: Cotton Incorporated’s 2019 Global Transparency Survey

% of consumer who say they are wearing the following clothing everyday or every other day in the past month:

CLOTHING PURCHASES COVID: U.S.Consumers seeking out for loungewear and active clothing

Percentage of consumers who plan to purchase the following in the next 3 months:

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

Plan to spend more on clothing in the next

few months

31%

Activewear Athleisure Denim Jeans

28% 27% 25%Loungewear

25%

CLOTHING PURCHASES: U.S.Brands should focus on activewear as health/wellness interest is surging

Health and Wellness are top priorityIncreased exercise

53%50%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

COMFORT IS KINGConsumer are rarely dressing up

and seek comfort

Percent of consumers who agree with the following:

85% 75%These days I rarely have a reason to

“dress up”

Wearing comfortable clothes helps me feel

better right now

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September 7-11

CLOTHING PURCHASES: U.S.Brands should focus on comfort in the apparel offerings

Wearing more comfortable clothes since COVID-19

Have purchased clothing made for comfort

69%

67%

Source: Cotton Incorporated’s 2020 Coronavirus Response Consumer Survey, Wave 3 September

30% 31% 35% 37% 42%

2015 2016 2017 2018 2019

WORK CASUAL DRESS ON THE RISECasual dress and telecommuting

rising as workplace benefitsPercentage of U.S. companies allowing:

32% 36% 40% 44%50%

Source: Society for Human Research Management

Casual Dress Telecommuting

COTTON = COMFORTConsumers choose cotton

% of consumer who describe cotton clothing, compared to manmade

fiber blended, as the most:

FAVORITE TO WEAR

COMFORTABLE

SUSTAINABLE

HIGH QUALITY

DURABLE

Prefer their clothing to be made of cotton

80%Source: Cotton Incorporated’s Lifestyle Monitor™ Survey

85%84%82%75%65%

SUMMARY

Economic impacts are widespread, but spending is bouncing back

Look for ways to capitalize on the

surge in online shopping

Understand how consumer’s

clothing habits are changing

COVID-19 ECONOMIC

IMPACTS

ONLINE SHOPPING

SURGE

CLOTHING TRENDS

The New NormalAccelerating Consumer Trends in the Current & Post-COVID World

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The New NormalAccelerating Consumer Trends in the Current & Post-COVID World

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