Pandemic alters but won’t stop Christmas shopping The Chandler Arizonan

Pandemic alters but won’t stop Christmas shopping

November 26th, 2020 Chandler Arizona Staff
Pandemic alters but won’t stop Christmas shopping
City News
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By Wayne Schutsky
Staff Writer

Despite the pandemic’s economic fallout, experts expect holiday shopping sales will remain relatively consistent this year compared to 2019.

“If it stays flat or even down by 3 or 4 percent…that for me is an optimistic scenario,” said Hitendra Chaturvedi, professor of supply chain management at Arizona State University’s W. P. Carey School of Business.

But how and when shoppers purchase gifts, decorations and other seasonal items is expected to change dramatically.

The pandemic likely accelerated the ongoing shift away from brick-and-mortar retail, experts say, and they expect online shopping’s share of sales to jump dramatically this holiday season.

“Between e-commerce and retail, you’re going to see a K-shaped curve…this is more like one is going to lose at the expense of the other,” Chaturvedi said.

“K-shaped” refers to an economic recovery in which different segments of the economy diverge on different paths, with some performing better than others and each trending in opposite directions – like the prongs on a letter K.

While one segment, like online sales, is on the upswing, another, brick-and mortar, trends downward, experts explained.

Chaturvedi said e-commerce made up 14 to 15 percent of the $740-billion holiday retail market in 2019, but he expects that share to jump to 40 percent this year.

But while the distribution of sales may be different, Chaturvedi said he expects overall holiday sales to remain consistent with 2019.

Katherine Cullen, senior director of industry and consumer insights for the National Retail Federation, agreed, citing her organization’s polling of consumers.

In 2019, the federation projected sales during the holiday season – Nov. 1 to Dec. 31 – totaled between $727.9 and $730.7 billion, which equates to an average of $1,047.83 per consumer.

This year, Cullen said polling shows consumers will still shell out about $1,000 during the holidays.

“What we saw is that where gifts and for holiday items like decorations, candy, food, cards, people are spending very much in line with last year and actually in line with what the five-year average has been,” Cullen said. “Where they’re a little hesitant is on those extra purchases for themselves and their families.”

One reason overall sales could remain consistent with past years is an expansion of holiday shopping season, which typically kicks off with Black Friday sales that go into effect late on Thanksgiving Day.

This time around, retailers started rolling deals out online weeks before Thanksgiving.

If you just compare the Black Friday period in 2019 versus 2020, you would see a steep drop off in sales this year, Chaturvedi said.

But the expanded shopping season has been the industry’s “saving grace.”

“There are going to be a lot of sales by these e-commerce guys again and again and again all the way through the end of December, so you have 45 days that’ll help e-commerce and holiday sales not be concentrated in just two weeks,” Chaturvedi said.

This year, many retailers moved away from that Black Friday model and launched sales online and in stores earlier in the season.

Cullen said that trend actually started last year.

“The term we were talking about last holiday was Black November with the kind of November-long sales that a lot of retailers were doing,” she said.

That trend has only intensified as retailers look to attract shoppers wary of crowded lines that a traditional Black Friday is known for.

Major retailers like Walmart and Target have already announced they will not open on Thanksgiving Day, opting to roll out deals online early and then open on Black Friday.

The one “wild card” that could throw a wrench into these holiday sales projections is the failure by Congress and the White House to agree on a second round of stimulus for most Americans, Chaturvedi said.

If Congress does not pass a new round of stimulus before the end of the season, sales could drop by around 20 percent, he said.

But, Chaturvedi was quick to caution that the situation is changing by the day.

“Every day, things are changing, so I can, I can even make a statement today that maybe that 20 percent…that now could potentially become a 15% because of the optimism about the vaccine that we learned about,” Chaturvedi said.

For shoppers, the change in retailers’ holiday shopping tactics means there are more options in place to avoid crowds amid rising COVID-19 cases numbers in Arizona and across the nation.

“I think the general consensus is that people aren’t going to want to shop in crowded stores and retailers want to make sure their employees aren’t exposed to crowded stores,” Cullen said, adding:

“And so they’re giving consumers the option to stretch out their holiday shopping season while still being able to take advantage of sales.”

She said retailers are more likely to offer curbside pickup for customers and offer the same sales online and in stores.

Shoppers are not the only ones impacted by the changing dynamics of holiday sales brought on by the pandemic.

The realities of this year’s shopping season could negatively impact workers who rely on seasonal employment.

Chaturvedi said in recent years employers typically add around 700,000 jobs during the holiday season, but this year that number is likely to be closer to 400,000 or 500,000.

Chaturvedi said the U.S. was already seeing those numbers come down annually before the pandemic but the current situation could hasten the decline.

“If we touch (400,000) or cross (400,000), that for me is an optimistic scenario,” he said.

What people are buying this year is also changing and that shift includes some very pandemic-specific buying habits.

Walmart and Target are already reporting that sales of clothing for the upper body are up and sales of clothing like pants and skirts are down, Chaturvedi said.

“Because if you’re sitting in front of this Zoom and your computer and you’re talking to folks and your peers in your offices, you change your uppers but you don’t change your lowers,” he said.

As more people spend time at home, purchases related to home improvement are on the rise, including lumber, appliances and power tools.

Consumer electronics and home fitness equipment are also seeing spikes in popularity.

Meanwhile, sales for suitcases are down 300 percent.

Cullen said she expects consumers will make an attempt to shop at their local retailers instead of reserving all their spending money for the big box stores.

“We do know people have wanted to support local businesses during this time and tried to make purchases specifically to support local businesses, so we expect people will be kind of looking all over to spread their holiday shopping out,” she said.

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