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Vaccine = Good News for World, Bad News for Masks image

Vaccine = Good News for World, Bad News for Masks

When face masks burst on the scene last spring amid the global pandemic, it wasn’t clear whether they would be a short-term sales opportunity or a permanent part of fashion wardrobes.

Yet since July, with the promise of a vaccine on the horizon and consumers having purchased baskets full of masks, sales have been declining, lending credence to the belief they are moving to a seasonal or gift purchase, rather than a fixture on daily shopping lists.

Signs Point to Slowing Sales

Indeed, searches for face masks peaked between March 29-April 4 and again showed a sharp rise between June 28-July 18, but have steadily declined since, bottoming out between Nov. 22-29, according to Google Trends. Trevco, which was early in launching MaskClub.com, has seen sales decline 10-15% from July levels, says CEO Trevor George.

And Etsy, which sold 12 million masks on $133 million in sales in April alone, posted a 34% month-over-month decline in September amid a “steady decline” in sales, Chief Financial Officer Rachel Glaser said in releasing third quarter financial results. That’s not to say the masks didn’t generate business – Etsy sold 24 million in the third quarter on $264 million in gross merchandise sales (GMS), Glaser said. But as a percentage of GMS, masks declined to 11% in the third quarter from 14% in the previous quarter.

January Drop-Off?

Licensed face masks are expected to be strong sellers as gifts during the holiday season, but may see a sharp drop off come January, says George. That’s not to say non-licensed and medical-grade face masks won’t continue to sell, but licensed versions, which carry a higher price, will likely decline more rapidly, says George, whose dozens of mask licenses were either extensions of existing deals or for a one-year term. Trevco’s revenue has increased 65% year-to-date, about 10-15% of which was tied to mask sales.

“I think now that the vaccines will be coming out people will use what they have and wind down,” says George.  “To see someone spend $10-$20 on a cloth face mask because they like the design, I think that is going to significantly die off after gifting, especially as consumers think the coronavirus is going to be sunsetting so ‘why spend the money?’”

Yet Concept One CEO Sam Hafif, whose company has mask licensing agreements with Disney, NBCUniversal, Line Friends (Line Corp.) and Care Bears (Cloudco), remains optimistic about the mask category’s future despite seeing a decline in sell-through as a percentage of retail inventory to 10-15% currently from a peak of 25-50% at the start of the pandemic.

“We do see masks as being a staple of peoples’ wardrobes along with socks and underwear, as Americans are now more aware of germ spread, and mask hygiene as a way to control the common cold and other viruses,” says Hafif.

But George, who earlier this year was more optimistic about the prospects for a longer term mask market, says the “no mask culture” created around mid-year by President Trump and others cut into sales. “Masks becoming a political issue and a thing ‘against freedom’ definitely crushed the cloth face mask industry,” says George.

Masks, the Gateway Product

As mask sales decline, however, the upside is that the business has brought in new customers and licensors. For example, Trevco signed its first agreements with Disney, Smurfs and ViacomCBS (Nickelodeon, Star Trek and others) for masks and hopes to extend those deals to apparel and other categories. Meanwhile, Etsy’s non-mask GMS rose 98% in the third quarter, and 38% of the four million mask buyers in the second quarter, returned in the third quarter for a non-mask purchase, Silverman said.

“We have not only scaled back but the attitude at the company is we are thankful for what we had and need to acknowledge that there is an end  to the road on this and we need to ride it down,” says George.  “If nothing else, it showed (licensors] what we are capable of and that in itself could be a stepping stone to more business.”

 

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