Accelerating Trends in Consumer Retail

Consumer Spending Shifts and Sector Performance

• Significant reductions (10–30%) observed in essential grooming categories including razor blades, deodorants, cosmetics, and fragrances.
• Conversely, athletic apparel, home decor, home renovation, RVs, and campers experienced strong growth despite recessionary conditions.
• These divergent trends reflect a cultural shift where discretionary spending reallocated from travel and dining to home-centric and wellness activities.

Accelerated Long-Term Trends Due to Pandemic

• Digital adoption accelerated rapidly across grocery and retail sectors, which historically resisted digital penetration.
• "Casualization" of professional attire became normalized; examples include Goldman Sachs shifting to daily casual dress codes.
• Social media usage surged as a primary entertainment vector, reinforcing pre-existing consumer behavioral changes.
• Industry consensus suggests consumers are "fundamentally changed," with uncertainty remaining regarding the permanence of remote shopping and dining habits post-lockdown.

Critical Role of Equity Markets in Economic Stability

• Public equity markets provided essential liquidity during the economic shutdown, serving as a "make or break" resource when debt markets were insufficient or too costly for balance sheets.
• May and June recorded the highest equity issuance volumes in history across the broader market, with consumer and retail sectors heavily represented.
• Companies utilized public market access to fund critical operations, specifically to pay employees, cover rent, and maintain business continuity.

Four Primary Drivers of Equity Issuance Activity

• Rescue Financings: Companies with critical liquidity needs in March and April issued stock or hybrid securities to remain operational.
• Offensive Capital Raises: Financially stable companies raised capital to cement competitive advantages, protect talent, and invest in brand and supplier relationships.
• Monetizations: Large shareholders of public companies sold equity for portfolio realignment and capital redeployment.
• IPO Market Recovery: Strong investor risk appetite facilitated landmark IPOs including Warner Music, Albertsons, and J.D. Peets.

Forward-Looking Market Outlook and Q3 Expectations

• IPO market viability depends on sustained public investor risk appetite and pricing valuations that exceed private alternatives.
• Goldman Sachs forecasts a robust IPO pipeline extending through the end of 2020 and into 2021 based on current backlogs.
• Q3 Issuance Drivers:
  • New Listings: A continuation of significant IPOs in the second half of the year.
  • Opportunistic Secondary Offerings: Public issuers capitalizing on strong stock valuations to secure liquidity ahead of election-year uncertainty and potential economic shutdowns.
  • Shareholder Liquidity Events: Increased monetization by existing shareholders via SPACs and pre-IPO private placements.
• Market appetite for new issues is characterized as "very good," supporting a healthy issuance calendar.