Holiday consumer spending offers insights into the retail industry, such as ecommerce‘s continuing growth, consumer spending, and customer relationships.
2020 has been extraordinary — the pandemic, natural disasters, and a divisive U.S. election.
Regardless of this, U.S. retail spending is up. The National Retail Federation recently reported that total U.S. retail sales (excluding automobiles, gas sales, and restaurants) for the first ten months of 2020 increased 6.4 percent at the exact same 2019 period. And that includes the poor retail sales in April 2020 when numerous stores and businesses were closed.
Let’s see our merchandise:
This isn’t to say that everything is hunky-dory in the retail sector. Just ask Pier 1, Sur La Table, Motherhood Maternity, J.C. Penney, Neiman Marcus, or some of the other dozens of merchants that filed for bankruptcy throughout the year.
So what does it all mean? What follows are five tips in the 2020 Christmas season.
1. ) Ecommerce Is Booming
From early October through Christmas Eve, online retail spending rose an incredible 49.0 percent, based to Mastercard SpendingPulse.
U.S. Retail Sales: Oct. 11 thru Dec. 24, 2020
Bar chart with 3 bars.
Year-over-year growth — and ecommerce% of total — excluding autos and gasoline.
PRACTICAL ECOMMERCE | Source: Mastercard SpendingPulse
View as data table, U.S. Retail Sales: Oct. 11 thru Dec. 24, 2020
The chart has 1 X axis displaying courses.
The chart has 1 Y axis displaying values. Range: 0 to 60.
Year-over-year growth — and ecommerce% of total — excluding autos and gasoline.3%3%49%49%19.7%19.7%increase in overall retail salesIncrease in ecommerce retail salesEcommerce percentage of totalU.S. Retail Sales: Oct. 11 thru Dec. 24, 2020PRACTICAL ECOMMERCE | Source: Mastercard SpendingPulse
End of interactive chart.
“At the onset of the pandemic, overall retail sales were down. But there was a substantial shift happening, and it was undoubtedly the best move toward ecommerce that we have ever seen,” said Joe McCarthy, director of performance marketing for Klaviyo, an email and SMS marketing platform. “Fundamentally, in 2020 we discovered multiple years of ecommerce development.”
This trend toward ecommerce may last. By means of example, Aisha Al-Muslim, a reporter for The Wall Street Journal, noted that many bankrupt brick-and-mortar merchants — such as Lord & Taylor, Stein Mart, and the preceding Pier 1 — have been obtained in the anticipation that they could still sell online.
2. ) Money Will Be Spent
Americans spent money whatever the pandemic, the election, the fire season, and the weather.
Statista affirms the entire data trends of the NRF and Mastercard SpendingPulse, noting which American retail sales in October 2020 alone grew by 8.5 percent over the same 2019 period.
If they have money, shoppers tend to spend it. There is likely always an opportunity if a merchant can find it.
3. Maintaining Clients Is Vital
Shopping habits changed in 2020. When physical stores closed in March and April, shoppers had to find alternative brands and channels.
“Lots of people [shopped with an internet merchant for the first time] from desire,” said Klaviyo’s McCarthy. “They couldn’t find a product from a traditional brand they had purchased from, so they discovered new alternatives.”
If a company acquired new clients, particularly during the Covid Christmas period, its ongoing success may depend on how well it retains those shoppers. Put another way, companies which obtained customers because of the pandemic is going to need to find ways to maintain shoppers loyal long term when it ends.
4. ) Not Everyone Can Win
No matter the growth in earnings, not every retail ecommerce merchant can or will make money. The future could be treacherous.
Total year-over-year apparel sales (physical and online), by means of example, shrunk 19.1 percent from October 11 to December 24, 2020, compared to the prior year, according to Mastercard SpendingPulse. Surely, apparel retailers were losing. But furniture and furnishings sales jumped 16.2 percent overall and 31% online for exactly the same period compared to 2019.
5. ) Local Providers
Ahead of this outbreak, sourcing foreign-made products made economic sense for many brands and retailers. But when those long supply chains collapsed , obtaining a local choice made a significant difference for many companies.
“The coronavirus pandemic snarled the world’s sprawling supply chains for months, shutting factories, disrupting shipping and making it challenging for companies to acquire products from factories to customers,” composed Mike Cherney from The Wall Street Journal.
“Now, many companies are considering changing the model to stop future product shortages and transportation delays, though it might increase costs. Some are having a look at transferring production closer to home. Others are considering dispersing small factories around the world as opposed to placing all their production in 1 location.”