COVID-19 casts a cloud over the 2020 holiday shopping season

By on October 26, 2020
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The pandemic makes it all but impossible to predict how much will be spent during the most crucial time of the year for most retailers, or whether people will spend at all. The only safe bet is that e-commerce spending, already popular, is about to become more so.

Predicting how the holiday shopping season will play out usually isn’t too difficult.

Most retailers say that spending during the first 10 months of the year will indicate how the holiday season will turn out.  The Christmas season matches up with spending during the first 10 months of the year, and that a three percent year-over-year increase is the least they expect in a decent economy.

But in the year marked by the worst global health crisis in 100 years, that conventional wisdom probably can be put aside. COVID-19, and the absence of a second stimulus package from the federal government, has so scrambled the market that no one has a clear idea of how the next two months will play out.

Take, for example, the National Retail Federation. Normally the federation releases its holiday forecast in early October. Last year’s report, which predicted a 3.4 to 4.1 percent increase in spending from 2018, was released Oct. 3.

This year? Nothing yet, and the Washington, D.C., trade association hasn’t said when it might issue a forecast, or whether it will issue one at all.

“It would be an understatement to say COVID-19 has disrupted the consumer buying process,” the federation said in a statement accompanying a podcast on the upcoming holiday season. “With decreased foot traffic from store shutdowns and a slowdown of discretionary spending earlier this year, COVID-19 has caused behavior changes that have affected demand and supply.”

The federation did predict that consumers expect to spend an average of $997.79 – about $50 less than what the organization predicted one year ago – during the holidays. That number was based on a survey of 7,660 consumers the trade association spoke with in October. 

Many of those surveyed said that, despite the likelihood of deep holiday discounts, they’re reluctant to buy non-gift items for themselves or their families.

The nation’s other major retail trade association, the International Council of Shopping Centers in New York, has issued a 2020 forecast. It’s predicting a 1.9 percent increase in holiday spending compared with 2019, a weak performance most years but maybe not so bad this year.

Total spending is expected to be approximately $862 billion, with the average adult shopper expected to spend $655 on holiday items.

E-commerce, which has been growing for the last five years, is expected to grow 25 percent during this Christmas season.

“Despite the difficulties the economy has faced, consumers are looking forward to the holidays and plan to spend just as much as in previous years,” said Tom McGee, the council’s president and chief executive officer, in a statement. “We expect to see an increase in online shopping activity which means that those retailers that have implemented an aggressive omnichannel strategy will likely do well during the holiday season.”

Locally, the 2020 holiday season is equally difficult to predict, said Terri Relf, senior marketing manager for the Inland Center Mall in San Bernardino and the Mall of Victor Valley in Victorville.

“The mall is open and we’re off to a good start, but we have no way of knowing how the season will turn out,” Relf said. “We’ll see what happens. It could be difficult. Right now, we’re doing everything we can to make the mall as safe as possible.”

Those safety measures include curbside service for picking up gifts, strict enforcement of mask and six-foot social distancing regulations, and sanitation station throughout the mall, which has 110 stores, three anchor tenants, and nearly 900,000 square feet of retail space.

Inland Center Mall and Mall of Victor Valley will both be closed Thanksgiving Day but will open at 6 a.m. on Black Friday, the following day.

More online shopping is virtually certain to happen this year, but Relf believes traditional retail will still do reasonably well.

“People are shopping now, so I have to believe that people will want to get out of the house and shop as we get closer to Christmas,” Relf said. “You can’t touch something, or smell something, online.”

The only safe prediction for this year’s holiday season is that online shopping will go up. Deloitte, the London-based accounting firm with multiple retail clients, is predicting a 1 to 1.5 percent increase in spending this year compared with 2019, but a 25 to 35 percent increase in e-commerce transactions.

Last year, online shopping rose 14.7 percent compared with 2018.

“Covid-19 is going to impact how and where people shop during the holidays, just like it has all year,” said Rod Size, Deloitte’s vice chairman and head of U.S. retail and distribution, during a recent Apple podcast sponsored by the Wharton School at the University of Pennsylvania.

“What we’ve found is that, during a downturn like the one we’re in now – and we’ve been looking at this over a 30-year period – is that a lot of [economic trends] tend to accelerate, not slow down.  So this movement toward more e-commerce should continue.” 

Spending patterns will be different this year, and some gifts that have been popular in the past might not be coveted this year, said Robert Kleinhenz, an economics consultant based in Long Beach.

“There are still too many families who are dealing with unemployment, so spending will have to be down some,” Kleinhenz said. “But I think retailers who deal in solid goods will do better this year than retailers who sell services.”

Kleinhenz used gift cards to make his point.

“In past years you might have bought someone you work with a gift card to go out to dinner,  but that might not be popular this year,” Kleinhenz said. “You won’t want to buy someone something they’re afraid to use, or can’t use for a long time. So I think retailers who sell goods will win out this year.”

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