Online Retailers Will Win Big This Holiday Season
The holiday shopping season promises to be one like no other before, and it won't be to the benefit of brick-and-mortar retailers, who have already had the roughest year in memory. Online retailers will pick up the pieces.
CBRE Retail Research predicts that physical stores will experience anemic growth this holiday sales season: less than 2%, if there is no major resurgence of COVID-19 or widespread lockdowns.
By contrast, online holiday spending this year will total more than $189B, Adobe Analytics predicts, counting sales between Nov. 1 and Dec. 31. That is a 33% increase compared with the same period last year.
The total might be even higher — north of $200B — if there is another federal stimulus payment to consumers and more physical stores go into pandemic-related lockdowns.
Altogether, U.S. consumers on average plan to spend nearly $1K each this ($997.79) on gifts, decorations and food for the holidays, as well as "non-gift" purchases for themselves and their families, according to an October survey by the National Retail Federation and Prosper Insights & Analytics.
That's down about $50 from last year, though nearly all of the difference is in the "non-gift" category, the survey notes. Spending on gifts is down only $8 from last year, and spending on decorations is up slightly. So the spending pie will be roughly the same this year, but online retailers are going to get more of it.
One sign that physical retailers are going to take it on the chin this year, and that they know that, are seasonal worker hiring patterns. Such hiring usually begins in October.
Thus year, according to recruiting firm Challenger, Gray & Christmas, retailers are looking to fill 378,200 temporary positions, down from 590,000 in 2019.
“The pandemic has thrown typical holiday hiring patterns off," Challenger, Gray & Christmas Vice President Andrew Challenger said in a statement.
"Despite current high unemployment and ongoing uncertainty, retailers, particularly those with a strong online shopping infrastructure, are anticipating high demand,” Challenger said.
Another factor that might depress consumer spending for the holidays is the nation's political uncertainty, coming as it does on top of a COVID-19 resurgence and sporadic bouts of civil unrest beginning with the death of George Floyd.
“Consumers have been on a great run of spending coming out of the lockdowns,” Kearney Lead Partner Greg Portell told CNBC. “All of that is on pause until we see some clarity on who is going to win.”