How will you spend this holiday? That’s on the minds of the nation’s retailers.
In the first holiday season since the coronavirus pandemic, shopper concerns about health of their families and their finances are likely to put a chill on spending, with retail sales expected to rise only slightly.
Sales are expected to increase between 1% and 1.5% from November to January as compared to last year, according to the consultancy firm.
While that would still add up to between $1.147 billion and $1.152 billion in spending, the forecast reflects the lingering uncertainty about the coronavirus as well as the economy.
A vaccine could spur consumer confidence and job growth, while continued spikes and winding layoffs could lead shoppers to focus more on saving than spending – though cash that would typically go toward travel and dining out may also allow more money for gifts.
“This year, one of two holiday scenarios will play out,” Rod Sides, vice chairman and U.S. retail and distribution sector leader of Deloitte, said in a statement. “Regardless of the scenario, however, the consumer’s focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget.”
With more shoppers relying on online shopping for everything from toothpaste and toilet paper to trampolines and home school and office furniture in the midst of the global health crisis, the holiday season is likely to spur even more virtual shopping cart clicks. The expected jump of between 25% and 35%, compared to last year’s 14.7% spike, would add up to between $182 billion and $196 billion.
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Deloitte says its overall projection is the middle ground between two different contexts that could play out during an unprecedented year.
If there’s little change or only a slight bump in sales, that could be the impact of family concerns about school-age children having to learn remotely from home, an increasing unemployment rate, or the wait for a vaccine. Or shoppers could be more focused on saving than spending. In July, the savings rate was 17.8%, compared with 7.4% the year before.
But we could see a different scenario – perhaps seeing a sales jump of 2.5% to 3.5% – if Congress finally passes a new relief bill that bumps up jobless benefits or an effective vaccine appears on the horizon.
Either way, though, sales are expected to fall far short of the 4.1% spike that occurred between November of last year and January.
“The lower projected holiday growth this season is not surprising given the state of the economy,” Daniel Bachman, Deloitte’s U.S. economic forecaster said in the statement. But “while high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat.”
Follow Charisse Jones on Twitter @charissejones
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