Retail

Retailers Shift Gears – And Digital – For Holiday 2020

Holiday Season Will Be About Digital 3.0, COVID

Saying that "we know holiday shopping will be different this year, and we will be managing sales events differently," Walmart this week announced that its stores will close for Thanksgiving in 2020 – a decision that would have bordered on sacrilegious at any other time. But this holiday season will be far from ordinary.

Judging from recent PYMNTS research on the COVID-19 crisis, consumers will need a disappearance of the pandemic (unlikely) or a vaccine (hopefully) before they will return to anything like normal holiday shopping behavior. Although no major retailer has gone on record yet about their expectations for the 2020 season, some signs are already pointing to pretty significant changes.

The first change will affect Black Friday, the day after Thanksgiving, when retailers normally launch the holiday shopping season with huge discounts that attract massive in-store crowds. To paraphrase REM, “it’s the end of Black Friday as we know it, and I feel fine.”

It’s a safe bet that Black Friday will be nothing like previous years, if it happens at all. While Walmart is closing on Thanksgiving, it has said nothing yet about its hours for Black Friday or how it will approach discounting.

We can expect retailers to take advantage of Black Friday to launch sales for overstocked items and promotionally priced goods, but not to attract the crushing insanity of years past. It’s likely that even three months down the road, retailers will still need to lead with safety first. That means customer-density rules, masks, one-way aisles and social distancing. That will be smart business – but not Black Friday as known in the past.

As for other changes we’re likely to see…

Small Business Saturday

This American Express-inspired event – in which small, local shops offer big discounts the day after Black Friday – brought in $19.6 billion in 2019. That could grow tremendously if communities choose to rally around the small businesses that have been devastated by the pandemic. We can expect Amex to double down on its promotions, with municipalities serving as willing promotional partners.

American Express has already shown a willingness to help by launching a new set of credits across its personal and business accounts to reward customers who shop at small businesses. The wild card here is the amount of small businesses that will still be solvent by autumn. Amex members receive a $5 credit for every $10 spent at a small business.

But for many SMB retailers, this holiday season will determine whether they stay in business or fold before the new year.

Cyber Monday

It’s a smart bet that Cyber Monday, when online retailers offer huge deals the Monday after Thanksgiving, will see a sea change in sales volume this year.

Cyber Monday took in $9.2 billion in 2019, but with Goldman Sachs adjusting its eCommerce forecast to a 19 percent bounce for 2020 as a whole, it’s not out of the realm of possibility for this year’s event to be a watershed moment for the shift to Digital 3.0.

Using the Goldman numbers, a 19 percent boost to last year’s Cyber Monday would put this year’s total sales at $10.2 billion. But that estimate seems low – especially if the Walmarts and Targets of the world decide to keep it safe and move their big discounts online.

So, a 40 percent jump isn’t out of the question. That would put this year’s total Cyber Monday sales at $12.7 billion.

The Bottom Line 

Overall, 2020 holiday sales volumes will hinge on COVID-19 and the efforts to mitigate it, either with better treatments or a vaccine.

Yes, economic factors will play into consumer spending, but nothing will determine whether we’ll see an increase in sales or a disastrous decrease as much as the virus.

And we can expect 2020’s holiday shopping season to move online dramatically. How much? That question is better answered by epidemiologists than retail forecasters.

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