IllinoisRetail Unprecedented and unpredictable: What’s in store for this holiday season? Matt Baker October 16, 2020 Share on Facebook Share on Twitter Share on LinkedIn Share via email Fears of an extended, COVID-induced recession have been somewhat allayed by consumer confidence, with retail sales exceeding pre-pandemic levels in the third quarter. This doesn’t mean, however, that brick and mortar stores can rely on holiday shopping to put them in the black. A new report from CBRE indicates that retail sales this holiday season should grow by about 2 percent, assuming there isn’t another major outbreak of the virus. That’s half of the typical year-over-year growth that we’ve seen the past ten years, but still a promising sign, given all the events of 2020. CBRE identified four trends that we should expect to see this year: a slowdown in brick-and-mortar sales, an extended shopping season, a second surge in e-commerce sales and attempts by physical retail to balance safety with experience. Slower brick-and-mortar sales The labor market has slowly improved from the nadir of March and April, but without future government stimulus, CBRE forecasts that unemployment will hover around 9 percent in the fourth quarter. Recovery has come unequally to different income levels thus far; wealthier individuals may not see any change in their holiday spend while lower-income individuals will have to cut back and prioritize. In addition to buying gifts and impulse purchases, consumers have recently concentrated their spending during this season on travel, gathering and experiences—all of which will see drastic pruning this year. Retail consumption throughout the pandemic has been defined by a shift toward essential goods and, as we are relegated to our homes, lifestyle products. The trend should continue over the holidays with lounge/athleisure wear, home furnishings, tools, kitchen equipment and similar categories topping the list. Longer shopping season The five days from Thanksgiving to Cyber Monday have long signaled the peak of holiday shopping. Brick-and-mortar stores offer doorbusters to get as much foot traffic as possible over the extended weekend and online retailers ramp up their promotions to lock in early sales. CBRE believes we will see a flattening of this curve. Best Buy, Target, Walmart and other retailers plan to adjust their hours and promotions in an attempt to curb the overcrowding that, while typically synonymous with Black Friday shopping, is in opposition with the health guidelines surrounding social distancing. To recapture revenue, retailers such as Home Depot are spreading their promotions out all during November and December and eschewing Black Friday sales altogether. Second surge in e-commerce sales The stay-at-home orders this spring forced many consumers to embrace e-commerce for the first time. This has catapulted an already rising trend years beyond where it would normally be. CBRE data shows that holiday retail sales in the U.S. have risen every year for the past five years, and that includes a projected increase in 2020. Online sales have also grown each of those years, sometimes by 3 to 6 percent, or by as many as 14 to 17 percent. CBRE expects a 40 percent increase in online sales this holiday shopping season. While Black Friday will likely be a shell of its usual self this year, Cyber Monday will be the opposite with e-tailers enhancing their virtual showrooms to replicate the impulse buys and excitement of the in-person experience. A one-day sale won’t do, however, and online outlets are encouraged to spread out promotions so that product availability and fulfillment efficiency aren’t hampered by a spike in activity akin to the rush on PPE equipment earlier this year. Balancing safety and experience in physical retail The buzz word in retail the past few years was “experience.” In an effort to fight the migration to e-commerce, brick-and-mortar stores have emphasized high-touch, interactive experiences with special prominence given to social gathering. While these techniques may have increased revenue in 2019, they are health hazards in 2020. This year, retailers—especially smaller mom-and-pop stores that don’t have a competitive online infrastructure to capture e-commerce sales—are pushing an “in and out” strategy to limit store capacity. Customers can browse items and engage with associates in the store while payment, gift wrapping and other tasks are handled at empty kiosks, in common areas or even on sidewalks, weather permitting.