Will Pandemic Impact Christmas 2020 Ecommerce Sales?

The Coronavirus pandemic that ended much of the global economy during the first half of this year may have an impact on Christmas 2020. To prepare, some retailers – both pure-playing e-commerce and omnichannel – should plan now.

The holiday shopping season, which in recent years has begun shortly after Halloween and run until Christmas Eve, represents half or more of annual revenue for many retail businesses.

It is important for these retailers to start planning now, even if some are opening again.

In this post, I will address some coronavirus-related scenarios and provide suggestions on how traders can assess the potential Covid-19 impact on their company's holiday sales.

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Will the pandemic affect Christmas sales? Photo: Ben White.

A quick recovery

On June 16, 2020, the U.S. The Department of Commerce's report "Advance Monthly Sales for Retail and Food Services" for May 2020. This report showed a 17.7 percent increase in retail sales for the month compared to April. This increase in sales represented the largest increase in US retail sales since 1992.

Adding to this is a somewhat positive hiring report: U.S. The Labor Department said that new applications for unemployment fell by 58,000 on June 13.

Therefore, as the Christmas shopping season rolls around this year, the pandemic can be a painful memory and retail has stabilized.

But even if the volume of retail sales is about the same as in previous years, will shopping behavior change? Will consumers still be social distance? Will many more consumers buy online instead of a physical store? Will suppliers be able to keep up with demand?

These are the issues that retail executives should consider now.

A slow recovery

While US retail sales increased significantly month-over-month in May 2020, they were still down compared to last year and earlier this year.

Total retail sales in May were approximately $ 485.5 billion in the US, down 6.1 percent from May 2019 and 7.9 percent from February 2020, which is approximately $ 527.3 billion.

Therefore, the increase in sales may not predict a particularly rapid recovery. In addition, supplementary unemployment benefits, which have added $ 600 per week in recipient's checks, are planned for July 2020.

If the unemployed and redundant workers suddenly find their income in jeopardy, they could cut spending significantly, which would slow down any economic recovery.

Given Christmas, what can retailers do to keep people shopping in the event of a slow and long-term recovery? Should e-commerce companies offer financing options from PayPal, Affirm, Klarna or similar services? Should retailers market Christmas set programs now and help donors spread their holiday expenses?

No recovery

What if the pandemic and its financial impact are still with us during the Christmas season?

Dr. Anthony Fauci, who is among the United States' leading experts on infectious disease, has said on several occasions that sloppy resumption of stores, restaurants, bars or even certain sports events can lead to a resurgence of Covid-19 cases this fall.

In addition, as of June 17, 2020, 10 US states – Alabama, Arizona, California, Florida, Nevada, North Carolina, Oklahoma, Oregon, South Carolina and Texas – experienced increases in the number of new cases of Covid-19 reported daily.

Finally, U.S. Federal Reserve Chairman Jerome Powell told a U.S. House Committee on June 17 that Congress needed to continue to support displaced workers because of the pandemic.

If the US and the world economy are still disappearing, the Christmas season will come, how will the stores cut costs to avoid losses? What kind of stock position should merchants take? If e-commerce sales increase when shoppers avoid brick-and-mortar use, will transport volumes hinder package companies and affect delivery?

Business Intelligence

Entrepreneurs and managers can start answering these questions now to evaluate how coronavirus can affect holiday shopping.

  • Contact suppliers to ensure that the inventory will be available. Identify potential inventory problems. Buy earlier when possible.
  • Consider distribution options to counteract further disruptions in shipping or a second round of closures. Would it make sense to place a certain inventory now at satisfied centers that are close to customers?
  • Connect with associations. Can your company collect useful data from retail companies or associations?
  • Talk to customers. Ask a core group of customers about their shopping plans. What would they like to see from your store?

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