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Recovery at Crossroads
The recovery from the COVID-19 recession is at a crossroads as government money runs out and companies continue to lay off workers. New coronavirus cases are surging across the country, which could lead to restrictions on businesses like restaurants, gyms and bars, and undercut consumer spending and further reduce holiday plans and travel. Economists have attributed the strength in retail sales to fiscal stimulus, especially a weekly subsidy paid to tens of millions of unemployed Americans. September’s robust sales reinforced expectations for record consumer spending and economic growth in the third quarter. However, many holiday forecasters are holding off on projections, and Amazon’s big two-day Prime event was not described as “the biggest sales event ever,” as it has been for the previous three Prime Days. According to data from Placer.ai, while many brick and mortar retailers saw increased traffic, Prime Days did not produce as big of a bump as usual. Analysts think year-over-year growth was basically flat after 8% growth last year. Holiday Shopping in a Pandemic Retailers are adopting a wide range of protocols to minimize in-store crowds without sacrificing holiday sales. The combination of an unprecedented season for ecommerce, far fewer people planning to travel or gather together for the holidays has caused shippers to warn that we could be headed for “Shipageddon” if people wait until the last minute to shop, with logistics systems being overwhelmed and unable to deliver packages in time for Christmas. Many retailers and shippers are asking people to have holiday shopping done before Thanksgiving. The media has picked up on Buy Online Pick Up in Store, and now touts “BOPUS” as a big benefit for consumers. Many retailers are offering curbside pickup and contactless checkout and have scrapped traditions like Thanksgiving openings and Black Friday doorbusters. Target may institute a reservation to shop system that guarantees people won’t have to wait outside in the cold. Holiday Ecommerce Sales Emarketer is projecting a major shift to ecommerce this holiday season and predicts US consumers will spend $190.47 billion this year online on holiday purchases, up 35.8%, and up $50 billion in sales versus 2019. They expect ecommerce to more than make up for a 4.7% expected decline in in-store sales over the holiday season, which they define as November and December. Shoppers are expected to rely more on ecommerce and try to minimize their in-person shopping trips, which may favor big-box retailers that sell a wide variety of merchandise and offer curbside pickup. The Cyber Big Five, Thanksgiving Day through Cyber Monday, will continue gaining share of the total holiday ecommerce pie, rising slightly this year to capture 20.5%. Emarketer forecasts that Cyber Five ecommerce sales in the US will bring in $39.10 billion in 2020, up 39.6% from 2019. Consumer Holiday Shopping Survey Amazon was the number one choice for holiday shopping by 61% of respondents, according to the fourth annual shopping study Convey A, followed by Walmart, Target and Best Buy, where 16% plan to shop for gifts. Beyond Amazon, eight of 10 respondents plan to do most of their holiday shopping online, with 30% planning to do it all online. And even though the trend lately has been to faster and faster delivery, nine out of ten shoppers were willing to give retailers extra time, with 74% willing to wait one to four extra days. The top three most important delivery services are free two-day shipping (44%), free shipping on returns (18%) and the ability to track packages en route (14%). The majority of respondents (58%) say that they are more likely to complete a purchase if the estimated delivery date is visible prior to starting to checkout. The top three concerns were late packages (42%), porch pirates (17%) and high shipping costs (16%). About 40% say they’ll start shopping earlier this year and two-thirds say it’s important to support local retailers who have been impacted by CV19. Ecommerce Post-Pandemic According to McKinsey, trends in China suggest that between three and six percentage points of market share gained by online channels during the pandemic will be “sticky.” The longer the pandemic drags on and impacts shopping behavior, the more likely it is that consumers will stick to their new habits. Google’s president of ecommerce, Bill Ready, said that they are seeing a much broader cross-section of retailers that now see ecommerce as a top priority. Google has also accelerated their own ecommerce plans, and is now allowing retailers in Europe, the Middle East and Africa to list products on Google shopping tabs for free, after doing the same earlier this year in the US. Companies from Amazon and Walmart to The Home Depot and Lowe’s have overhauled supply chains and invested in the systems necessary to make ecommerce run smoothly and integrate with brick and mortar operations. Ecommerce has grown from a relatively small part of many retail operations to as much as 30% to 40% of business. Global GDP It may take until at least 2022 for global GDP to return to pre-pandemic levels, according to the latest analysis from the International Monetary Fund (IMF). The IMF noted that there are some regions of the world, including Latin America, where recovery will take longer, perhaps through 2023. According to the IMF, the unprecedented policy response to the pandemic worldwide has helped contain global financial stability risks in the near term. However, the recovery remains vulnerable to a new virus outbreak, policy missteps or other shocks that could impact economies and derail the recovery. Palm Reading Amazon has introduced palm recognition technology in two Seattle stores and believes there is much broader potential use for this technology, including stadiums, offices and other gated or secured locations. Customers at the stores near Amazon’s campus in Seattle can use their palm for entry into secured areas and to buy goods. Amazon says the technology is more private and purposeful than other biometric technologies and it’s contactless. Palm images are not stored on devices and data is encrypted. Amazon plans to offer the service to others who can benefit. America’s Most Patriotic Brands Jeep, Walmart and Amazon lead the list of the top 50 most patriotic brands. Jeep has topped the list every single year of the Brand Keys survey, which is now in its 18th year. Walmart ranked number six and Amazon came in at number 10. More than a quarter of the top 50 are new to the list this year, including pandemic favorites Clorox, Purell, Netflix, Zoom and Dominoes. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval. Comments are closed.
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