The growth rate of retail sales this holiday season is expected to be less strong than in recent years, according to forecasts published on Tuesday by the consulting company Deloitte.
But how muted this growth will be will depend on how much high-income consumers walk and how much the belt is tightened in lower-income households.
Some economists are now calling for a K-shaped recovery, a scenario in which some industries see profits while others are missed. Unlike so-called U- or W-shaped recoveries, K-ricochet growth is unevenly divided between income groups, creating a “having” and “not having” scenario.
Since the coronavirus pandemic began, some industries are still having fun where workers can be productive at home. Others, however, have seen sales dry up as consumers avoid eating out, going to the movies and relaxing.
“This year will see one of two holiday scenarios,”
According to Deloitte, holiday retail sales this year will increase between 1% and 1.5%, amounting to between $ 1.147 trillion and $ 1.152 trillion between November and January. That compares to a 4.1 percent increase in 2019, when sales were nearly $ 1.14 trillion, according to the U.S. Census Bureau.
The range of 1% to 1.5% is obtained by mixing two different scenarios driven by large and small users, Deloitte explained.
On the one hand, Deloitte expects that there could be a relatively steady jump from 0% to 1% in holiday sales if consumers – especially lower-paid people – remain nervous about their finances and health and have to spend more on most of your expenses for needs. Exhaustion of unemployment benefits could also make this first scenario more likely, Deloitte said.
But a larger increase from 2.5% to 3.5% could happen if richer consumers gain even more confidence in the last half of 2020. Factors that could strengthen confidence in this group, include shrinking unemployment, an additional government incentive and an effective Covid-19 vaccine, Deloitte said. This scenario assumes that higher-income money does not spend on vacations and experiences such as concert tickets, and Broadway will focus on spending on holiday gifts, with people who are more eager than ever to spend.
“While high unemployment and economic anxiety will weigh on total retail sales this holiday season, reduced costs for pandemic-sensitive services such as restaurants and travel could help boost retail sales to some extent,” said Daniel Bachmann, a US official. Deloitte economic forecaster.
As many users still spend most of their time at home and avoid crowded public places, it is inevitable that more costs will be made online during this holiday season. Deloitte expects holiday e-commerce sales to grow 25% to 35% to between $ 182 billion and $ 196 billion. This compares with the annual growth of 14.7% online in 2019, with sales reaching 145 billion dollars.
But it is also putting pressure on retailers to prepare for the onslaught of online orders, starting next month and running until delivery deadlines arrive.
“A lot of the people I’m talking to right now are afraid they’ll run out of inventory,” Coresight founder and CEO Deborah Weinswig said in an interview. “We already have limited capacity. … And the consumer has no idea this is coming.”
A number of retailers, including Macy’s, have said they predict that holiday shopping will begin earlier than ever this year.
Many have announced they will close their doors on Thanksgiving, ending what has become a recent tradition of opening before Black Friday. And strategies are explored to prevent store overcrowding in an age when social distancing must be imposed. Companies are trying to assess what consumers will want to buy in the midst of the global health crisis. The consensus seems to be: Everything is cozy.
According to Deloitte, retailers should, perhaps most importantly, plan a scenario in which the recovery in the United States is uneven – with a wedge driven even further between the rich and the poor.