Holidays sales are forecast to be strong this year, up over both 2020 and 2019, but that doesn't mean that malls — and their retailer tenants — are out of the woods yet, as they face supply chain issues and labor woes.
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Deloitte, in its annual holiday retail forecast, predicts that holiday retail sales (November to January) will increase between 7% and 9% compared with last year. That compared with year-over-year growth between November 2020 and January 2021 of 5.8%. Mastercard SpendingPulse forecasts that holiday retail sales (Nov. 1 to Dec. 24) will rise 7.4% compared with 2020 and, perhaps more importantly, jump 11.1% compared with 2019.
E-commerce sales aren't finished growing, either, with the company predicting a year-over-year increase of 7.6%. As an illustration of how much the coronavirus pandemic drove online shopping, Mastercard also predicts that e-commerce sales will be up 57.3% in 2021 compared with 2019.
"With potential supply chain and labor supply issues impacting the season, retailers are expected to offer omnichannel promotions early on," Mastercard reports, particularly in electronics and apparel, which shoppers tend to give as gifts.
Shoppers should expect fewer discounts, more limited inventory at stores and longer wait times for orders. That is because of international supply chain problems that include factory shutdowns, chip shortages and port congestion, CNBC reports, along with labor shortages that will slow down rectification of those supply chain problems.
The holiday shopping forecasts come as many malls and major retailers had a reasonably good summer in terms of traffic, according to Placer.ai, though visits dipped again in August, perhaps in response to the uptick in Covid-19 cases in many parts of the country, but also because Labor Day weekend was partly in August in 2019 while it was fully in September this year.
In July 2021, mall visits finally outpaced 2019, the company reports, up 1% for indoor malls and 2% for outdoor malls. In August, however, the numbers were below 2019 again, as they had been every month before July, with indoor malls seeing 2.5% less traffic and outdoor malls 4.6% less.
Brokers and analysts say that while some malls are doing well, older malls are often hurting, especially those with large vacancies where department store tenants used to be, The Wall Street Journal reports.
The largest physical retailers did quite well in the summer. Walmart saw visits up 2.9% in July and 3.9% in August when compared to 2019, Placer.ai notes, and Target saw visits up 15.7% in both July and August when compared to 2019.
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