CHRISTMAS CREEP

Digital
Retail

HOLIDAY SHOPPING STARTED EARLIER THAN EVER BEFORE. WHAT'S IN STORE FOR THE REST OF THE SEASON?

Black Friday is three days away, but holiday shopping has been in full swing since before Halloween candy was cleared from the shelves. The pandemic year has forced retailers to rethink their traditional holiday sales strategy. Many of the largest players kicked off the 2020 holiday shopping season earlier than ever before in hopes of revitalizing sluggish sales while simultaneously avoiding the usual holiday in-person shopping surge at stores. The goal for all retailers has been to maintain sales while avoiding serious COVID-19 logistical nightmares. Three major trends have emerged from the uncertainty and we have outlined them below.

DIGITAL IS HERE TO STAY

Even before the pandemic, holiday shopping was becoming an increasingly digital experience. In 2019, holiday e-commerce sales rose by 13.2%. Compared with just 1.6% growth for in-store sales.

In 2020, experts project a 14% decrease in brick-in-mortar store sales. Although traffic to physical stores has rebounded in recent months, most retailers are still experiencing an overall 25% drop in foot traffic. Meanwhile, the most recent U.S. Commerce Dept. reports show that ecommerce sales have grown 31%. Online giants like Amazon have enjoyed impressive sales growth during this pandemic-induced shift towards digital shopping, but traditional retailers with strong online presences like Target, Walmart, and Best Buy have also been able to capitalize on these trends as well. Ecommerce now represents roughly 16% of total U.S. sales, and most experts agree that number will continue to climb rapidly in the coming years.

Roughly 40% of Black Friday shoppers made purchases online last year during the sales event. The pandemic will likely cement this e-commerce trend since a number of major retailers in the United States will be completely closed on Thanksgiving. The closures represent a major shift in the logistics of Black Friday. In recent years, Black Friday has been slowly creeping into Thanksgiving evening and effectively splitting the sales event across two days. Going shopping immediately after turkey this year is effectively canceled. Instead, many retailers are running month-long online Black Friday sales.

SHIPPING DELAYS ARE GUARANTEED

The dramatic increase in online shopping will push the US shipping infrastructure to its limit. In a recent interview, a FedEx executive explained, “There will be days within the holiday season where the industry will be over capacity.” The capacity shortfall could be as high as 7 million packages per day between Thanksgiving and New Years. Shippers have already been operating at near full capacity for months during the pandemic, and some experts worry that major carriers are not prepared to handle the additional holiday season demands. In short, consumers should brace for long shipping delays this holiday season.

CONSUMER SPENDING WILL BE UNEVEN

Despite the large increase in online sales, overall US household consumer spending has only risen 1.4% this fall, and experts predict these sluggish sales figures will continue into the holiday season. In fact, a recent McKinsey survey shows a 25% decrease in overall holiday spending intent; however, some analysts predict that decreased levels of holiday travel might actually contribute to steady holiday retail sales levels. Other reports say 66% of consumers plan to spend at the same amount or more this holiday season to preserve a sense of normalcy. These conflicting reports suggest that consumer spending will be uneven this holiday season. Some consumers will continue to spend on gifts this year, while others will severely cut holiday budgets due to economic uncertainty.

At CASTUS, we leverage our Teams’ extensive retail expertise on behalf of clients. CASTUS is committed to driving long-term growth for your company in a constantly evolving business environment. Many things are uncertain right now, but with the right planning, we can help you migrate risk and accurately assess business opportunities.

HOLIDAY SHOPPING STARTED EARLIER THAN EVER BEFORE. WHAT'S IN STORE FOR THE REST OF THE SEASON?

Black Friday is three days away, but holiday shopping has been in full swing since before Halloween candy was cleared from the shelves. The pandemic year has forced retailers to rethink their traditional holiday sales strategy. Many of the largest players kicked off the 2020 holiday shopping season earlier than ever before in hopes of revitalizing sluggish sales while simultaneously avoiding the usual holiday in-person shopping surge at stores. The goal for all retailers has been to maintain sales while avoiding serious COVID-19 logistical nightmares. Three major trends have emerged from the uncertainty and we have outlined them below.

DIGITAL IS HERE TO STAY

Even before the pandemic, holiday shopping was becoming an increasingly digital experience. In 2019, holiday e-commerce sales rose by 13.2%. Compared with just 1.6% growth for in-store sales.

In 2020, experts project a 14% decrease in brick-in-mortar store sales. Although traffic to physical stores has rebounded in recent months, most retailers are still experiencing an overall 25% drop in foot traffic. Meanwhile, the most recent U.S. Commerce Dept. reports show that ecommerce sales have grown 31%. Online giants like Amazon have enjoyed impressive sales growth during this pandemic-induced shift towards digital shopping, but traditional retailers with strong online presences like Target, Walmart, and Best Buy have also been able to capitalize on these trends as well. Ecommerce now represents roughly 16% of total U.S. sales, and most experts agree that number will continue to climb rapidly in the coming years.

Roughly 40% of Black Friday shoppers made purchases online last year during the sales event. The pandemic will likely cement this e-commerce trend since a number of major retailers in the United States will be completely closed on Thanksgiving. The closures represent a major shift in the logistics of Black Friday. In recent years, Black Friday has been slowly creeping into Thanksgiving evening and effectively splitting the sales event across two days. Going shopping immediately after turkey this year is effectively canceled. Instead, many retailers are running month-long online Black Friday sales.

SHIPPING DELAYS ARE GUARANTEED

The dramatic increase in online shopping will push the US shipping infrastructure to its limit. In a recent interview, a FedEx executive explained, “There will be days within the holiday season where the industry will be over capacity.” The capacity shortfall could be as high as 7 million packages per day between Thanksgiving and New Years. Shippers have already been operating at near full capacity for months during the pandemic, and some experts worry that major carriers are not prepared to handle the additional holiday season demands. In short, consumers should brace for long shipping delays this holiday season.

CONSUMER SPENDING WILL BE UNEVEN

Despite the large increase in online sales, overall US household consumer spending has only risen 1.4% this fall, and experts predict these sluggish sales figures will continue into the holiday season. In fact, a recent McKinsey survey shows a 25% decrease in overall holiday spending intent; however, some analysts predict that decreased levels of holiday travel might actually contribute to steady holiday retail sales levels. Other reports say 66% of consumers plan to spend at the same amount or more this holiday season to preserve a sense of normalcy. These conflicting reports suggest that consumer spending will be uneven this holiday season. Some consumers will continue to spend on gifts this year, while others will severely cut holiday budgets due to economic uncertainty.

At CASTUS, we leverage our Teams’ extensive retail expertise on behalf of clients. CASTUS is committed to driving long-term growth for your company in a constantly evolving business environment. Many things are uncertain right now, but with the right planning, we can help you migrate risk and accurately assess business opportunities.

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Digital
Retail