Deloitte predicts tepid-to-modest holiday sales growth - Retail Dive

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Dive Brief:

• This year's retail holiday sales are likely to be muted, with growth of 1% to 1.5% from last year and sales of more than $1.1 billion, according to Deloitte's annual estimate for 2020, released Tuesday. However, the consulting giant expects e-commerce sales to balloon by 25% to 30% year over year.
• Deloitte presented a "K-shaped" approach to thinking about the recovery in retail spending amid the COVID-19 crisis. That includes a scenario where anxiety holds sales down to 0% to 1% growth, as well as a rosier scenario of a 2.5% to 3.5% jump from last year.
• The latter scenario may happen if consumer confidence is buoyed by factors such as "effective federal pandemic relief bill with an unemployment insurance benefit supplement, and the creation of an effective vaccine," Deloitte said.

Dive Insight:

Simply put, there is no precedent for a holiday season quite like the one approaching. That makes predictions, which are typically made by extrapolating from the past, all the more difficult than usual.

The confounding factors are numerous and most relate directly or indirectly to the COVID-19 pandemic. How will its spread change in the fall? How will consumers respond? How will supply chains be affected? How fast will the economy recover? How effectively will the government respond to both the economic and public health challenges presented by the pandemic?

In the first of Deloitte's double-scenario prediction, where sales growth potentially flatlines, consumers would be saving more and spending less on the holidays. "[C]onsumers will continue to experience mounting anxieties, related to both their finances and health," Deloitte said of this scenario. "This lack of confidence could be caused by a variety of factors, including the expiration of the unemployment insurance benefit supplement, continued school closures and lack of an effective vaccine; as well as an increase in unemployment numbers." 

In the more optimistic case, consumers will have regained some confidence from public health and economic progress. They may also redirect money that they've cut from travel and experiences (which the pandemic put a major damper on) toward holiday spending, according to Deloitte. 

One thing that can be said with relative confidence is that e-commerce is going to be a big winner of the season. Along with Deloitte's estimate of robust digital growth, survey data from analytics firm Glassbox found that 70% of respondents planned to do the majority of their holiday shopping online, via the web or mobile. 

"Regardless of the scenario, however, the consumer's focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget," said Rod Sides, vice chairman, U.S. retail and distribution leader for Deloitte, said in a press release. "For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store, and the criticalness of safe and speedy fulfillment."

On the topic of safety, PayPal survey data shows that more than 80% of merchants plan changes related to COVID-19 safety. But 27% said they are nonetheless still worried about the safety of in-store shopping this season. 

The Link Lonk


September 16, 2020 at 11:19PM
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Deloitte predicts tepid-to-modest holiday sales growth - Retail Dive

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