Footwear and apparel retailers who were hoping American consumers would set aside a share of their second stimulus check for discretionary purchases may be out of luck — if data on past behaviors are any indication.
According to a report released Tuesday by Coresight Research, among consumers who received a first stimulus check (around April), basic needs and financial obligations were the main priorities. About 44% of Americans who received that first payout, averaging $1,200 per adult, spent their stimulus checks on bills, including for utilities, cellphone, cable TV and vehicle payments.
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The second most popular category for stimulus-check spending was nutrition, with more than one-third of consumers indicating they used the money for food items such as groceries, eating out and takeout.
Meanwhile, discretionary retail spending was a low priority for the extra cash some Americans had on hand. And if they did opt for a so-called nonessential retail purchase, a majority of U.S. consumers, holed up in their houses due to governments orders or fear of public spaces, spent on home improvement. Only 6% of stimulus check recipients had spent on beauty, and 5% on clothing, footwear or accessories, Coresight found.
With unemployment hovering at historic highs and the economy in dire straits, it makes sense that cash-strapped Americans are prioritizing their financial stability amid uncertain times. According to a Civic Science study released this month, Americans are keen to pay off their debt as the macroeconomic environment remains uncertain: Of the 2,100 people surveyed, 44% said they paid off all of their credit card debt over the past three months. By contrast, just 7% said they’ve taken on more credit card debt — and most in that group have lost their jobs or been furloughed.
Meanwhile, when asked by Civic Science how they plan to use a second potential stimulus windfall, 33% of the respondents said they would use it to pay down debt and bills, compared with 29% in March.
It may be a smart move for some consumers, but it could deal a devastating blow to pandemic-plagued retailers who were hoping to see their balance sheets reinvigorated by pent-up demand among consumers with extra cash in their wallets.
Footwear and apparel firms have been among the hardest hit by the global health crisis: JCPenney, J.Crew and Neiman Marcus are just a few of the many big-name retailers to seek Chapter 11 protection since March when the pandemic first took hold in the United States.
As it stands, Congressional talks around the second stimulus package have resumed and White House officials stressed Monday that President Donald Trump still supports the checks to individual Americans.
“The president would love to see the direct payments to Americans. The president would love to see the school funding,” said White House press secretary Kayleigh McEnany in her press briefing on Monday. “There are several items that we’d like to see happen. The more relief for the American people — and those in need, in particular — the better.”