It’s sales prediction time for one of the most unusual holiday selling seasons ever. COVID-19 continues to afflict the country, and unemployment remains high nationwide. Will people in New York and around the U.S. really brave an ongoing pandemic during flu season to shop, or will they hunker down and order online from Amazon, Macy’s and other major retailers?
COVID-19 has already had a huge effect on Thanksgiving and Black Friday. Beginning with Walmart, a slew of major national retailers, including Macy’s, Best Buy, Bed Bath & Beyond, Target and Dick’s Sporting Goods will remain closed on Thanksgiving. Simon Property Group will also shutter its malls for the day. Most cite the pandemic and/or allowing employees to spend the holiday with their families as reasons.
Black Friday may look different, too. The Centers for Disease Control has already stated that shopping in-store that day will put someone at high risk of spreading the virus, so look for more online shopping than those long lines of people waiting to enter a department or discount store. Retailers are doing their part; many of the traditional deals offered on that day will be online only.
A number of outlets also report that consumers already are shopping for the holiday, so November to January numbers might be slightly skewed. Shoppers concerned about whether desired items will be in stock will likely buy when they see them. As I write this, Amazon reported sales of $3.5 billion for its Prime Day event on October 13-14. Because it was held much later in the year than usual, I’m betting that many shoppers got a head start on their gift purchases.
The result is a wide range of predictions for the critical sales period. CBRE Retail Research is forecasting an increase of less than 2% this year — and that’s if we see no serious second wave of the virus or resulting government-mandated store closures. Similarly, the International Council of Shopping Centers expects a 1.9% year-over-year increase. Deloitte has predicted an increase of just 1% to 1.5% vs. 4.1% growth in 2019, with online sales to rise 14% to 18% year-over-year. Forrester’s updated global retail forecast said sales in-store sales will contract by 2.5% in 2020; e-commerce sales will grow faster than in 2019. At press time, the National Retail Federation, which normally releases its predictions in early October, had yet to issue its forecast.
But there are some positive signs. Sales have been increasing at some chains, especially those that sell essential items. Home goods retailers have done well all year, as we make our residences-turned-offices-schools-and-gyms more comfortable. Adobe reported that August online sales rose 42% year-over year — but that’s down from the 55% increase seen in July as more stores reopened and consumers wanted to get out of the house.
The result is that at least one observer is noting that the pandemic will bring consumers around to buying “stuff” (even apparel) again.
“Current limitations on experiences, coupled with consumer hesitation to go out like they did pre-pandemic, will have consumers favoring more tangible gift items this holiday,” observed Marshal Cohen, chief industry advisor, retail at NPD Group. “Experiential gifts, like spa certificates, had grown over the past couple of years, but that trend will be disrupted this year. We’ve already seen this happen over the recent Mother’s and Father’s Day holidays, where popular general merchandise categories saw sales lift for the week that was two and three times what it was in 2019.”
That’s one reason that a more optimistic view comes from my old friends at Coresight Research, who predict that total U.S. retail sales will rise 5% from October through December. (Kiplinger agrees, also predicting a 5% jump.) With fewer people traveling and attending cultural events (because they’re closed), their monies can be redirected to products. The firm also predicts a healthy (9% to 9.5%) year-over-year rise in food sales as well as shoppers trade up to more premium products.
What will this mean for real estate? Landlords should plan for accommodating more curbside pickup, while retailers should prepare for even more buy online, pickup in store (BOPIS).n Nordstrom and other retailers are creating events and displays that will draw customers while keeping them safely distanced. Shoppers who do enter a store will want to exit quickly. Efficiency will be key. But expect surprises in this unique selling season.
Whatever the holiday brings, I hope it finds you and yours safe, happy and healthy. Here’s to a better 2021.
Debra Hazel Communications
Arverne, NY 11692