HOLIDAY SHOPPING season in flux as retailers adapt.
Pandemic forces retailers to be nimble in the chase for sales
In a year that so far has been anything but normal, retail industry analysts and experts say there will also be nothing normal about the 2020 Christmas shopping season.
The covid-19 pandemic has changed the way people shop, and retailers are already adjusting their plans for this year’s Christmas shopping season so customers can shop safely while still enjoying price cuts on holiday gifts and decor.
One big change shoppers are sure to notice this year is the much earlier promotion of deals on toys, electronics and other popular gift items. While it may seem to many consumers that stores start their Christmas preparations earlier every year, retailers are poised to begin their 2020 holiday promotions well before Halloween.
The accelerated “Christmas creep” is partly an attempt to reduce store crowding and maintain social distance guidelines, experts say.
Walmart Inc. and other retailers such as Target Corp., Kohl’s and Dick’s Sporting Goods will close on Thanksgiving this year, forgoing the early Black Friday events they typically hold that evening. The move has led to speculation that the day traditionally considered the start of the Christmas shopping season will be much more subdued than in years past.
“Retailers have a vested interest in spacing out the shopping activity this year,” said Carol Spieckerman, a retail consultant and president of Spieckerman Retail.
Downplaying the usual Black Friday doorbusters that draw large crowds of eager shoppers would be a wise move, she said.
“Black Friday is a perilous undertaking this year and the liability factor has increased exponentially,” Spieckerman said. “Retailers would be wise to shift Black Friday deals to digital or at least reduce the number of in-store deals and space out in-store displays.”
However, Ken Perkins, president of research firm Retail Metrics LLC, said
the Thanksgiving closures could cause a “bump” in sales the next day. And while he believes retailers are concerned about crowded stores and making them clean and safe, “they are more concerned about empty stores,” he said.
“They recognize Holiday 2020 is likely to skew very heavily toward contactless transactions but will be very promotional, as it is going to take a little extra this year to lure consumers into enclosed malls/stores that are susceptible to virus transmission,” Perkins said.
Mark Cohen, director of retail studies at Columbia University’s Graduate School of Business, expects plenty of pre-Thanksgiving, Black Friday and pre- and post-Christmas promotions this year, only “somewhat muted and biased toward ecommerce ordering.”
In-store doorbusters are likely to draw crowds despite the chance of spreading the virus, Cohen said, and retailers would be irresponsible to offer them.
“Smart people will order online or wait since discounts tend to deepen after Black Friday, Cohen said. “Stupid people will show up and some of them will get sick.”
Spieckerman suggested stores use in-aisle checkout as another strategy to minimize crowding.
Walmart implemented just such a strategy, called Check Out With Me, several years ago. Employees are stationed in high-traffic areas and supplied with handheld devices to check out shoppers so they can avoid having to stand in long lines
at cash registers.
As for any other plans to meet the needs of this year’s Christmas shoppers, the Bentonville-based retailer said in a statement Friday that “we don’t have specifics to share at this time.”
“We’ve shifted along with our customer over the past several months, and will continue to do so,” the company said. “We understand what’s top of mind for our customers this holiday season, and we’re being thoughtful in our planning.”
Target said in July that its Christmas sales strategy includes plans to start offering holiday promotions next month. The Minneapolis-based retailer said in a July 27 news release that this will allow customers to shop safely without missing out on deals both in stores and online.
The company also said it will make an additional 20,000 products available for same-day pickup or delivery, including gifts, everyday essentials, and fresh and frozen grocery items. This will make Christmas shopping safer and more convenient for customers, Target said.
Kohl’s also expects customers to begin their Christmas shopping earlier this year and will offer special deals online and in-store throughout the season.
“As we move into the holiday season of this very unusual year, we are adapting our plans in response to changing customer expectations and behaviors,” Kohl’s Chief Executive Officer Michelle Gass said in a July news release.
Shoppers have already turned to e-commerce in a huge way this year because of the pandemic, and experts say it will play a big role in Christmas shopping as well.
Walmart’s online business doubled in the second quarter this year, and Perkins said at least 15 other retailers saw similar growth. “Walmart and other retailers would be wise to stock fulfillment centers and leverage stores to fill digital orders,” he said.
Spieckerman said the season will require a delicate balancing act for retailers, who must prepare for whatever way consumers choose to shop.
“On one hand, retailers must be in stock in stores, particularly in the toy category where visual cues and kids’ participation drive sales,” Spieckerman said. “At the same time, they must prepare for an onslaught of e-commerce activity as some shoppers steer clear of” stores.
Retailers face other head winds going into the season. Economic uncertainties are likely to be a factor in Christmas sales revenue. According to Coresight Research, 48% of shoppers say they’ll spend less this Christmas and 28% plan to start shopping earlier than usual.
Brad Bedwell, Walmart’s merchandising director of preschool toys and omni merchandising, told CNBC this week that the retailer has shipped more toys than usual in anticipation of increased online demand.
Cohen called the move a “well-warranted risk.” Adults may choose not to exchange gifts, he said, but they’ll make sure the children aren’t slighted.
Offering promotions early and spreading them throughout the season will also help avoid a shipping crunch as Christmas nears.
“Retailers have a vested interest in spacing out the shopping activity,” Spieckerman
said. “The trick will be to distribute orders among multiple providers. Relying too heavily on the U.S. Postal Service in particular will be dicey.”
Shoppers also will want to buy and mail gifts early to avoid expected shipping surcharge increases. The financially challenged postal service said last month it will add Christmas surcharges this year for the first time. UPS has also said it will raise its peak surcharges.
If many shoppers do in fact spend less this Christmas, that could significantly affect the entire industry, since the season’s sales represent more than 20% of total annual U.S. retail sales, Coresight said in its U.S. Holiday Retail Report.
Cohen said that with near-record unemployment and more layoffs expected, along with the possible cessation of government relief, it’s “highly likely that spending even net of diminished travel and entertainment will be muted.”
Perkins, though, thinks that with the lack of entertainment opportunities such as concerts, ball games and international travel, those dollars will instead be channeled into Christmas purchases.
While Spieckerman doesn’t expect holiday sales to plummet “under the current circumstances,” she said that “value-oriented retailers like Walmart, Target and even dollar stores will fare better” than other retailers.
“The status of government stimulus support and election aftermath are major variables that will determine whether this holiday shopping season is a boom or a bust,” Spieckerman said.