New research from global consulting firm AlixPartners argues that the “official” November-December definition is “meaningless” this year—and perhaps forever—due to COVID’s dramatic effects on shopping behaviors and long-bubbling retail trends now accelerated by the pandemic. In its newly released forecast for retail holiday sales in the U.S., the firm for the first time included October in its definition of the holiday-shopping season.
This is all reinforced by a complementary consumer survey showing among other things that almost half of Americans plan to begin their holiday shopping before Halloween.
The firm’s forecast for this newly defined October-through-December holiday season is an increase in sales of 1.0 to 2.6 percent over the same three-month period last year, when sales totaled $1.132 trillion. Meanwhile, the firm’s survey, an annual poll of more than 1,000 consumers, showed that 49 percent of consumers plan to start holiday shopping by Halloween or earlier, an increase of 7 percentage points from last year’s survey.
“The traditional November-December holiday-season definition is meaningless this year—and, I would argue, for the future as well,” said Joel Bines, global co-leader of the retail practice at AlixPartners and a managing director at the firm, in a news release. “For years now, holiday sales have been pulled forward earlier and earlier, thanks mostly to the explosion in online shopping. This, in turn, has led to such things as the diminishment of Black Friday, of door-buster sales and of many other traditions. The pandemic has accelerated what was well on its way to happening anyway; the question now for retailers is whether and how fast they can adapt to this new world. Our recommendation is to move practical digital transformation coupled with rigorous cost control to the very top of the agenda, because ‘the future,’ ready or not, is right now.”
The consumer survey also found that 45 percent of Americans plan on doing the majority of their holiday shopping online, an amount up 15 percentage points from last year’s survey. Additionally, it found that 23 percent expect to spend less on holiday shopping this year than last year, which is a deterioration of 7 points from last year’s survey, while the percentage of those planning to spend the same or more dropped to 76 percent, from 85 percent. Notably, of those earning more than $100,000 annually, 84 percent said they expect to spend the same or more.
Among all those polled in the survey, the top retail categories where consumers plan to spend the same or more this season were apparel (cited by 80 percent), toys (77 percent), footwear (75 percent), and electronics & video games (74 percent). Meanwhile, 37 percent said they expect to spend more on American-made products this year, up 6 points from last year’s survey.
“In addition to online sales likely breaking records this holiday season, so too will curbside and in-store pickups,” said Sonia Lapinsky, a managing director in the retail practice at AlixPartners, in the release. “This means that agility will be essential for retailers across their entire ecosystem. As consumers are shopping in new ways more than ever, retailers need to break down silos across their organizations and create a seamless experience across all shopping channels. Plus, such things as the announced move of Amazon Prime Day this year from July to this fall, and the advent of promotions such as the 10.10 shopping event, means that retailers need to be readier than ever to make quick, real-time adjustments.”
“As our forecast implies, this holiday season could be a tough one for retailers overall. However, as our survey suggests, there may be upside potential for those able to cater to higher-income consumers, and for those playing in certain sectors,” added Alexa Driansky, a senior vice president in the retail practice at AlixPartners, and one of the contributors to this year’s forecast and survey, in the release. “Overall, the amount of uncertainty out there is unprecedented. The winners in this environment will be those who can quickly adapt to the dramatic channel-shift playing out right now and leverage the resulting increased data to drive decisions that create a seamless and safe customer experience.”
The AlixPartners US Retail Holiday-Sales Forecast is based on proprietary AlixPartners methodology and was first instituted in 2012. All its numbers are seasonally adjusted, and it covers core retail sales, which exclude motor vehicles, fuel, and restaurants and drinking establishments. The 2020 AlixPartners US Retail Holiday-Outlook Survey polled 1,005 US consumers ages 18 and above September 3-5, 2020.