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Closing Out 2020 Will Be No Holiday for Retailers

December 9, 2020

New BRG research analyzes holiday shopping trends and provides strategies to combat middling sales and logistical challenges resulting from COVID-19.

While retail sales recovered from the initial shock of the April–May shutdown, and most retail sectors had achieved year-over-year increases by late fall, this holiday shopping season has proven to be dramatically different, with few stores open on Thanksgiving and most retailers downplaying Black Friday as a major shopping event.

According to new research from BRG, holiday sales pulled forward well before the traditional kickoff, with retailers launching promotional campaigns aimed at grabbing sales early and limiting traffic-driving events like Black Friday and Cyber Monday.

This effort, according to the US Census Bureau, led to 8.5% retail growth year over year in October. BRG’s research anticipates that overall holiday sales—defined as November and December purchasing—will end up 3% as compared to 2019 figures, with November increasing by as much as 10%, and December down by as much as 4% year over year.

“COVID-19 is poised to once again disrupt retail activity across the country for months, dramatically reducing store traffic, as we saw on Black Friday,” said Rick Maicki, a managing director in BRG’s Retail Performance Improvement practice. “But retailers can weather the storm through a combination of inventory management, promotional planning and leveraging shopping trends caused by the pandemic—all while actively monitoring the situation and responding quickly.”

Even before the pandemic, retailers faced growing pains associated with year-round online shopping and the adoption of omni-channel marketing strategies. Meanwhile, the challenges of COVID-19 continue, particularly in light of surging infection numbers in recent weeks. While essential retailers (food and drug, home improvement, etc.) benefit from increased shutdowns, many sectors (apparel, specialty retail, department stores) face severe declines amid looming shutdowns.

“Promotions ideally should involve the bundling of products, understanding that most shoppers will make fewer trips to the store,” said Keith Jelinek, a managing director in BRG’s Retail Performance Improvement practice. “Retailers also should hold more inventory further upstream to avoid product being trapped in stores as traffic dwindles due to occupancy constraints, while utilizing local fulfillment options and ship from store.”

Beyond strategies for the broader retail industry, BRG’s research provides sector-specific guidance in the areas of clothing, electronics, sporting goods and furniture. Clothing and department stores in particular have relied on in-store shopping historically, which means they need to be especially innovative in their promotions.

December sales will be impacted heavily by COVID restrictions, consumers’ economic concerns and shipping limitations.  Broadly, retailers must focus on flexibility and agility to shift their fulfillment to match the consumers’ purchasing patterns and leverage their store networks for local fulfillment.  Success in the coming weeks will depend on the ability to monitor the situation actively and respond quickly. Retailers that can navigate these difficult times will be well positioned for the future.

To access the full publication, click here.

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Related Professionals

Keith Jelinek

Managing Director

Los Angeles, Century City

Richard Maicki

Managing Director

New York

Michael Casey

Director

Boston