Amid heightened fears of the ongoing pandemic and resultant social distancing, retailers are gearing up for an unprecedented holiday season. No wonder, the season, which accounts for a sizeable chunk of yearly revenues, is a make or break for retailers. Evidently, retailers need to address any logistical or inventory issues and roll out strategies to provide a seamless shopping experience, whether offline or online.
To beat the COVID-19 blues, retailers are looking for an early start to the festive season with an extended promotional period to avoid rush at stores, given the health concerns. Per AlixPartners, the global consulting firm, nearly half of US consumers are likely to kick-start their shopping for the festive season before Halloween. The consulting firm now expects holiday season to span between the period October and December.
Joel Bines, global co-leader of the retail practice at AlixPartners said “The traditional November-December holiday-season definition is meaningless this year—and, I would argue, for the future as well. For years now, holiday sales have been pulled forward earlier and earlier, thanks mostly to the explosion in online shopping.” Bines added “The pandemic has accelerated what was well on its way to happening anyway.”
The consulting firm envisions an increase of 1-2.6% in retail sales on a year-over-year basis during the newly defined “October-through-December” holiday season. In the last year, sales amounted to $1.132 trillion during the aforementioned period. According to the poll conducted by AlixPartners, apparel, toys, footwear, and electronics & video games emerged as the top retail categories where consumers intend to spend the same or more this festive season.
Thus, keeping in mind consumers’ product preferences and growing inclination toward online shopping, retailers need to replenish shelves with in-demand merchandise and ramp up investments in digitization this holiday season to draw customers. The AlixPartners consumer survey also highlights that 45% of customers plan to make majority of their holiday purchases online. This reflects an increase of about 15 percentage points from last year’s survey.
It is quite apparent that retailers need to play dual in-store and online roles. In this respect, the industry players have been directing resources toward digital platforms, accelerating fleet optimization and augmenting supply chain. In fact, companies’ initiatives to expand delivery options — curbside pickup or ship-to-home orders — and contactless payment solutions have been a boon amid the pandemic. Additionally, retailers are investing in renovation, improved checkouts and mobile point-of-sale capabilities to keep stores relevant.
According to a report from CNBC, Deloitte envisions holiday sales between $1.147 trillion and $1.152 trillion, which suggests an increase of 1-1.5% during the November-January period. Meanwhile, e-commerce sales are estimated to improve 25-35% to reach $182-$196 billion, per the consultancy firm.
Retail bellwethers from Walmart WMT to Target TGT and from Best Buy BBY to Costco COST are certainly trying all means to make the most of the upcoming season. Meanwhile, e-commerce behemoth Amazon AMZN has unveiled plans to recruit as many as 100,000 full and part-time employees to meet the surge in online demand more efficiently.
Despite all endeavors, there is a lingering fear about how comfortable consumers will be in terms of purchasing. Well, if consumers choose to tighten purse strings, retailers have to tough it out this shopping season. However, industry experts believe that any measure undertaken by the government to stimulate demand or a breakthrough in COVID-19 vaccine may lift consumer sentiments, and in turn retailing activities.
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