PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Holiday Shopping Expectations  

By at 6 November, 2020, 10:05 am

by Raymond J. Keating-

The calamity that has been 2020 continues, and now with Halloween behind us, retail businesses across industries, and of all shapes and sizes, turn to the Christmas holiday shopping season. And we are all left trying to figure out what it might look like, especially given the continuing high levels of unemployment and COVID-19 spiking.

One would expect that holiday shopping spending will be down versus previous years, and that is born out in surveys heading into the season.

First, Gallup reported: “Americans predict they will spend an average $805 on Christmas gifts this year, significantly below their estimate a year ago ($942) and the lowest October holiday spending projection Gallup has measured since 2016.” It also was noted that 28 percent expect to spend less than last year, and that is the highest percentage saying that since Gallup’s 2012 poll.

The numbers were slightly different in Deloitte’s holiday survey, but the direction was the same. For example, Deloitte found: “Shoppers expect to spend $1,387 per household during the holiday season this year, down -7% YoY,” and “38% of shoppers plan to spend less YoY because of concerns around economic instability.”

As for what consumers are looking for specifically, Deloitte reported:

“Nearly 51% of holiday shoppers feel anxious about shopping in-store.”

“Contactless shopping experiences are in demand with 73% planning to have items delivered vs. 62% in 2019; preference for curbside pickup more than doubled YoY.”

“Online retailers (62%) and mass merchants (50%) are the top holiday destinations as shoppers pull back from browsing formats.”

To put all of this in further perspective, Gallup noted:

“Holiday sales typically increase year-over-year, rising 3.3% on average since 2000, with sales up more than 5% in strong years and around 2% in weak years, according to figures compiled by the National Retail Federation. Since 2000, holiday sales have been worse than that only twice: in 2008, during the global financial crisis and December 2007-June 2009 recession, and in 2009, when the economy was still recovering from these events. Should Americans’ predictions for their holiday spending hold up over the next month, retailers may see gains of just over 2% in sales, on average, this year.”

Finally, how much do holiday sales matter to retailers?

The National Retail Federation points out that over the past five years, November-December holidays sales represented 19 percent of annual sales, and in 2019, ecommerce sales made up 20.1 percent of holiday sales. That ecommerce percentage promises to jump higher this year.

And keep in mind that retail trade is dominated by small businesses, with 91 percent of employer firms in retail having fewer than 20 employees.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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