Despite the huge unemployment rate across the country and the worst economic climate since the Great Depression, holiday retail sales overall are expected to rise this winter, albeit by a modest 1% to 1.5%, according to Deloitte. Analysts project sales of around $ 1.15 billion between November 2020 and January 2021.
But with limits on the number of customers allowed in stores to accommodate social distancing, many shoppers will turn to e-commerce more than ever. Deloitte expects e-commerce sales to grow between 25% and 35%, year-over-year, during the 2020-2021 holiday season, a big jump from the 14.7% increase in online holiday shopping in 2018 to 2019.
Analysts at Deloitte predict two possible scenarios that retailers should prepare for: one in which the entire holiday season remains relatively flat, and another that offers some hope for future growth in 2021.
The current savings rate is more than double that of last year (17.8% in July, compared to 7.4% in 2019). This scenario posits that consumers are less likely to spend on Christmas gifts and instead allocate emergency funds for what lies ahead in 2021.
Consumer confidence is shaky right now, but analysts say it could improve, especially if there were an effective federal bill to ease the pandemic with supplemental unemployment insurance benefits or the approval of an effective COVID-19 vaccine. In the short term, a more likely contributing factor would be that consumers would have redirected travel and vacation funds to send holiday gifts.
“Retail spending is very bifurcated. they spent, “he says. Rod sides. , Deloitte vice president and leader for the company’s US retail, wholesale and distribution practice.
Some retailers have already changed their store hours, including large stores that began announcing plans to close Thanksgiving in July. Retailers will start promotions earlier and run through the holiday season, Sides tells Fortune, and these Thanksgiving closings will only add more emphasis to Black Friday than in previous years.
As they have done before, retailers will innovate to address this new normal, “says Sides.
And yet, even with the awareness that this holiday season will be different from all previous ones, it turns out that only a fraction of small and medium-sized businesses are proactively preparing for the holidays, according to a new report from PayPal this week. . . . Instead, many small and midsize retailers are taking a “wait and see” approach.
Among the 1,000 small and medium retailers surveyed in sectors ranging from household goods and electronics to fashion and cosmetics, 57% of business owners said they had not started preparing for a holiday season during a pandemic, although one of every five affirms their future. . It depends on the results of the holidays this year. That includes adjusting staffing levels – 70% say they don’t plan on hiring extra help during the holidays or bringing back employees laid off due to pandemic-related cuts.
Demand of consumers later in the year, “says Greg Lisiewski, vice president of Global Pay Later at PayPal.
Having recently launched a new “buy now, pay later” (BNPL) product in August, PayPal says more flexible payment plans will also be critical to securing sales during a period of economic uncertainty. The financial services company says that 45% of merchants already offering BNPL financing options could see holiday sales grow by at least 5%, and that 42% of retailers say the additional payment option has proactively fought “shopping cart abandonment”.
