There’s good news and bad news.
It’s been roughly seven months since the coronavirus pandemic started to clinch its fists around the United States and its economy. And while some experts would say we’ve at least made ground on better understanding the novel virus, it’s hard to deny that the plethora of issues borne of it are rapidly evolving — sometimes daily, if not hourly.
The same is true for retail: knowledge and awareness have grown in tandem with challenges. On one hand, the virus has forced firms to speed up their digital evolution — which has become a boon to consumers in search of convenience and competitive pricing. On the other, the global health crisis has pushed teetering retailers off the cliff and has held the reopening/re-strategizing plans of others for ransom as spiking cases and inconsistent government insight stoke uncertainty.
And that’s not even counting the so-called second wave. (Or is this the third wave?)
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For better or worse, retailers are heading into a holiday shopping season that is like no other. And the forecast shows there is much to be concerned about — but there are also a few reasons to be optimistic.
“As we approach the holiday shopping season, retailers are coming to grips with how much consumer behaviors have changed in the last six months,” explained Nikki Baird, VP of Retail Innovation at Aptos, a retail technology provider. “Retailers need to operate with the mentality that the recent changes in shopping behaviors may not be temporary. That said — hope is not lost. The pandemic has forced retailers to accelerate the omnichannel transformations they’ve been talking about for a better part of a decade.”
Here, we round up four reasons retail’s holiday season (and store reopenings) could be doomed and a couple reasons to be hopeful.
In-Store Shopping Will Be Hit or Miss
As New York, the early epicenter for the outbreak in the United States, began to see its COVID-19 cases stabilize in June, some experts posited that a playbook for managing the virus was beginning to emerge. The school of thought was that if other cities and states could take a page from New York’s book, things might start to even out elsewhere.
However, just this week, cases in New York City have ticked back up —along with a series of seemingly random spikes across the country. The clear indication that New York is not out of the woods — and thus no other city is — certainly threatens retailers’ plans for a robust return to in-store shopping.
“Concern over the virus is still keeping consumers out of stores,” explained Beth Goldstein, executive director and industry analyst for accessories and footwear at The NPD Group. “According to an NPD/Civic Science poll conducted at the end of August, only 35% of consumers had shopped in a store for clothing, footwear, or accessories during the past month. This percentage will likely improve as we head towards holiday, but it is a very low bar.”
What’s more, added Goldstein, even for those who want to shop in-store, “it’s not a great experience these days.”
“Waiting on line, all of the precautions and limited trying on options are all factors that make in-store shopping challenging,” she said. “After a number of years of working to make retail more experiential, it’s back to being transactional.”
Clothing and Footwear Remain Low on the List of Priorities
Apparel and footwear, with the exception of certain categories that align with the comfort-at-home lifestyle, have suffered from lack of demand, according to Goldstein. “The continued restrictions on social gatherings, dining [and more] suggests that they will likely remain challenged,” she said.
Indeed, it’s a trend that’s already hurt the dress shoe category — and is a key reason behind the recent bankruptcy of Brooks Brothers, which suffered from a dramatic decline in special occasions and events, leading it to seek Chapter 11 protection in July.
While there had been some bursts of hope that consumers would display pent up demand for fancier clothing and footwear as they adjust to living in pandemic times, some experts are now suggesting a record high unemployment rate and a hard-to-pass stimulus package are all serving to keep cash-strapped Americans leery about spending on nonessentials.
What’s more, the jarring financial fallout from the health crisis has led many Americans to double down on saving. According to a Civic Science study released in August, Americans are keen to pay off their debt as the macroeconomic environment remains uncertain: Of the 2,100 people surveyed, 44% said they paid off all of their credit card debt over the prior three months. By contrast, just 7% said they’ve taken on more credit card debt — and most in that group had lost their jobs or been furloughed.
Weather Woes Aren’t Helping
Meanwhile, as the weather turns cooler across much of the U.S., and the flu season picks up, many are skeptical that consumers will find the need to venture out of their homes to don their Sunday’s best fashion. (See: Twindemic.)
Add to that the fact that sporadic coronavirus outbreaks are also pushing back plans for school reopenings, which was expected to serve retail a fourth-quarter boost as parents stock up on seasonal clothing and other school supplies — and it spells bad news for retail balance sheets during the back half of the year.
Election Year Uncertainty
Election year anxiety — and its ripple effect on consumer spending as well as the stock market — is a phenomenon that certainly predates the current cycle: According to data from Epsilon, during the 2015-2016 election season, retail sales dropped 9% weeks prior to the election, regardless of party affiliation — Democrat, Republican and Independent.
With the current presidential election occurring amid a pandemic — as well as varying opinions on how well the current administration worked to contain the outbreak — anxiety for consumers is at an all time high. And, just as nervous investors don’t invest, worried consumers tend not to shop.
But Earlier Seasonal Shopping Could Shift Some Tides
According to Rob Bailey, CEO & founder of data-automation company BackboneAI, this year, consumers are adding a whole new set of shopping demands to their wish lists, and chief among them is a need for earlier holiday deals.
“From starting their shopping sooner to insisting on contactless purchases for immediate gratification, how and when consumers shop is happening in unprecedented ways during 2020’s relentless pandemic,” Bailey explained.
So far, retailers — Target, offering “Black Friday pricing” all November is one example — are answering the call by offering the deep discounts that are often associated with Thanksgiving weekend much sooner. (Target, Dick’s Sporting Goods, Kohl’s, Walmart and many others are also opting to go dark on Thanksgiving in hopes of minimizing the spread of COVID-19 by keeping large crowds at bay.)
“To meet shoppers’ evolving demands, savvy retailers know that they need to stabilize their product offerings amid COVID’s unstable environment if they want to be competitive — and successful — this holiday season,” Bailey noted.
Omnichannel Is a Life Raft
“Retailers must adjust to the new reality and meet consumers where they are,” explained Jordan Cohen, acting chief marketing officer of What If Media Group, a performance marketing company. “They are shopping online more than ever — about half of Americans say they’ve made an online purchase in the last 30 days — and are insisting on contactless purchases when shopping at brick-and-mortar locations.”
He added, “[They’re also] seeking out value for their money over brand loyalty in a weak economy where two-thirds of Americans tell us they are making less money than they did in 2019.”
For what it’s worth, noted Baird, the industry is maturing quickly when it comes to its ability to deliver “unified experiences” such as buy online pickup in store (BOPIS) and buy online pickup at curb (BOPAC).
Many retailers — DSW, Nordstrom and Target among them — are also effectively leveraging their stores as mini-fulfillment centers for online orders.
“During the holidays, consumers will continue to leverage — and demand — these flexible fulfillment options,” Baird said. “Greater visibility into inventory levels, more flexible as well as contactless purchase and collection options, and highly blended digital/physical purchase journeys are the expectations of the post-COVID-19 consumer. These capabilities are critical to meeting consumer expectations this holiday season and looking ahead to 2021.”