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Consumers Aren’t Shopping Holiday Sales in 2020 — But Here’s When They Are Buying

The consistent growth of e-commerce has been a valuable revenue stream for retailers in 2020, but it may undermine the usual role played by online holiday sales.

The latest data from the Adobe Digital Economy Index shows that Labor Day digital sales reported muted growth compared to the predictions, while comparative revenue on non-holiday days hit unexpectedly high numbers.

Labor Day online sales amounted to $2.6 billion, which was a year-over-year increase of 12%; this fell below expert forecasts, even those made prior to COVID-19 and its acceleration of e-commerce. By comparison, the week leading up to Labor Day reported year-over-year growth of 33%, according to the DEI, which suggests that these holiday sales are no longer dominating the retail calendar.

“The relatively low online turnout for Labor Day is a grand reversal of the pattern we’ve been seeing for the past few years,” said John Copeland, VP of marketing and customer insights at Adobe. “In the past, holidays have almost always grown faster than the average day. But what we are seeing is that the elevated online shopping levels due to COVID-19 are minimizing the impact of specific shopping holidays and events.”

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This is reflected in the number of multibillion-dollar sales days that have occurred outside of holiday periods. In 2019, there were only two days that saw online shopping account for $2 billion or higher, outside of the holiday season. But between January and August 2020, there have been 130 days that reached this number, with every day of May and June surpassing $2 billion. There have also been three days that reached $3 billion — 2019 had none.

Overall, this growth has been vastly positive for retailers: Since March, the Adobe Index reports that an additional $107 billion has been spent online in 2020, resulting in a total of $497 billion in the first eight months of the year. This is likely to have been partially sustained by the growing mobile commerce space, which now accounts for 40% of all online sales. This equals $190 billion in sales made through smartphones this year, and the DEI forecasts that this share of the digital market will reach 50% by September 2022.

Chart showing e-commerce predicted and actual sales for 2020
CREDIT: Courtesy of Adobe Analytics

Despite these numbers, overall e-commerce growth has been slowing down since June. After May’s peak of 78% YoY growth, August reported a comparatively low 42% YoY increase. Adobe experts attribute this to the reopening of physical stores in many states and the resulting shift of spending back toward brick-and-mortar.

“Now, 42% YoY growth is a lot higher than what’s typical for August,” said Copeland. “But we are seeing online spend slip as states reopen. This could have interesting implications for the 2020 holiday shopping period — assuming that states continue to reopen and COVID-19 levels stay the same or improve.”

This should be kept in mind when retailers prepare for the holiday season. Purchases are likely to be spread more evenly across channels, as well as across more days on either side of the official sale period. Apparel is also in a challenging position, as many consumers have now stocked up on the items they need for their new lifestyles, be it comfort or outdoor product. The DEI reported a 3% decrease for apparel sales in August, while grocery and electronics grew by the same amount.

“Once people had enough clothes to get them from the couch to the work Zoom and back again, the outsized boost to online clothes shopping went away,” said Taylor Schreiner, director of Adobe Digital Insights. “Success for retailers will depend on understanding and adapting to the new normal for consumers. There is an opportunity to define not only what the new normal looks like, but what is the new look for the COVID-19 era and beyond.”

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