How COVID-19 will Affect Businesses this Holiday Shopping Season?
By: Sydney Gergen
The overarching question is: How will consumers spend this season? Americans' concerns over their finances are incredibly mixed with only around 20 percent who are explicitly worried about their finances this holiday season. With that said, women in particular are more concerned than men are about finances. As early as June, a survey was sent out to a large population in which nearly 71% of people planned to cut back on their shopping in order to pay for expenses for holiday celebrations with friends. Compared to a close 67% of people surveyed who said that they would be spending less on celebrations with family members. The types of cutbacks were typically trending in the areas of gifts and food along with alcohol and beverages.
Between both the pandemic and the struggling economy, there will almost certainly be a negative decline in holiday shopping this year. Before the pandemic, the average American family typically spent $942 on holiday festivities including gifts and food purchases. Based on a recent survey, the number of American families that were planning to spend only $300 or less on holiday-related spending increased by a total of ten percent from last year. The chart below shows the precautionary cost-cutting measures that many families are planning to take this year.
Consumer shopping habits will change along with the crazy year that 2020 has provided. Many Americans are preparing for an online holiday that is considered safer for everyone during the pandemic. With nearly half of Americans already shopping for holiday gifts online, there are still 31% of Americans who are going into stores to purchase items. This split is mainly due to generational and political differences. For example, Millennials, Gen-Z and Democrats are more likely to shop online compared to in store due to health and safety concerns. Baby boomers and conservatives are more likely to shop in stores.
Overall, online shopping will be at an all time high this upcoming holiday season. Nearly 35 percent of consumers said they will be shopping less at malls this year; resulting in around 59 percent of Americans indicating that they are uncomfortable shopping in a store with number only increasing.
Tamara Charm and Brian Ruwadi, coauthors of McKinsey’s fourth annual holiday shopping report, mention: “We fielded our research before a lot of the recent shutdowns in Europe, and there was already a lessening of folks wanting to go in stores—people wanted to go online,” said Charm. “I think we’ll see even more of that. Consumers are wanting to participate in these events in a modified way: either completely online or buy online and pick up in store or pick up outside the store. We’ll see a lot more physical distancing and a different way of delivering so that retailers can not only meet the demand safely, but also manage delivery, inventory, and their profitability.” Not only did COVID-19 prompt stores to increase their internet presence, people are recognizing the benefits of online shopping and the protection that they are given through shopping online during a pandemic.
There has also been a shift of personal values this past year for most consumers. The economic reality is that most people have been placed in unfortunate circumstances during the COVID-19 crisis. Even those whose incomes haven’t been affected are more conscious of what they’re spending and care more about the value of what they’re spending the money on due to the uncertain times. This leaves individuals with a lot to consider when making financial decisions this upcoming holiday season: Have your values changed your financial decisions during the pandemic, or have they remained constant?
Works Cited
Brusuelas, Joseph. “Holiday Sales to Limp Forward as Pandemic Weighs on Economy.” The Real Economy Blog, 19 Oct. 2020, realeconomy.rsmus.com/holiday-sales-to-limp-forward-as-pandemic-weighs-on-economy/.
Charm, Tamara, and Brian Ruwadi. “Holiday Shopping in 2020.” McKinsey & Company, McKinsey & Company, 20 Nov. 2020, www.mckinsey.com/industries/retail/our-insights/holiday-shopping-in-2020.
Sakal , Victoria. “How COVID-19 Is Changing the Holiday Shopping Season.” Morning Consult, 23 Sept. 2020, morningconsult.com/form/2020-holiday-shopping/.
Wisniewski, Mary. “How Much Should You Spend On Your Holiday Gifts?” Bankrate, 2018, www.bankrate.com/personal-finance/how-much-should-you-spend-on-holiday-gifts/.
as someone who works in retail i found it interesting that there was so many people voicing concern vs how many people I see shopping at this time, which is a lot more then the data is saying, which makes me wonder about how certain areas of the world may deal with deciding weather or not they see it as important to go shopping for the holidays despite there being a pandemic.
ReplyDeleteIt interesting to see the split of people going in verses online shoppers. I feel like its easier to spend less when online shopping because you don't have to pass by all the isles in the store with tempting offers. Although online shopping is safer I do feel bad for all the small businesses that are unable to compete technologically.
ReplyDeleteIt is interesting to see that a lot of people say that they will not go into a store because they are scared of the virus. This shocks me because it seems like a lot of people are still going out, whether it is with a mask or without one, and they are having parties and inviting people over, which makes me think that some people say certain things on a survey to be less judged, especially when there are massive consequences to not taking the virus seriously.
ReplyDeleteIt's crazy to think that Americans used to spend almost $950 on the holidays. What's even crazier is the fact that the pandemic has lowered this number to under $300. While I understand that stores aren't going to see as much foot traffic this year, I did not expect that this would impact the American average so heavily. However, it will be interesting to hear the statistics surrounding the holidays.
ReplyDeleteOnline shopping was already on the rise before the pandemic struck. Retail stores like Sears were already seeing a decline. Perhaps the pandemics change to how shopping is done might leave only the retail giants like Walmart and Costco left standing.
ReplyDeleteIt is no surprise to me that people will be cutting back on holiday spending due to the pandemic or that people will be shopping more online. I feel that people already began shopping online more consistently and now with the pandemic, they are given another reason to stay on their coach and not go out. I feel this pandemic will not only change holiday shopping this year, but possibly in the years to come. Once people get a taste of online shopping, they may never want to enter a store again.
ReplyDeleteI feel like the pandemic may have affected elderly people more with online vs. in-store shopping. I know that elderly people like grandmas and grandpas aren't always tech savvy and like the in-store holiday gift shopping better. But with the pandemic and those ages being the most affected, I feel it really changed their shopping plans. But lots of the younger generation has already been online shopping for a while and it is much more convenient with them and a busy schedule opposed to older ages with lots of time. Malls have ben talking about closing down for a couple years now are continuing to get less and less busy every month.
ReplyDeleteHonestly when I went black friday shopping there were still hundreds of people lined up at a plethora of stores across southern Wisconsin. Better yet, theres online stores that've already put in place. I know so many people that shopped online and prefferred it over the store even before the pandemic.
ReplyDeleteThis is very interesting but yet not surprising I think everyone expected this to happen, when the pandemic hit people had to stay home forcing them to shop online if they needed something. There was no black Friday shopping on a Friday this year due to the pandemic because they usually are shoulder to shoulder in store, so people had to do most of their shopping online. One thing that did surprise me though according to some of your data there is a bunch of people saying that they will not go in store shopping due to being around people and risking their selves yet when I leave my house there are a bunch of people in stores and at restaurants so I think that maybe people don't care about it as much as they say they do I personally don't mind going out and shopping for a little bit.
ReplyDeleteI agree that spending for Christmas will be down because people want to be smart with their money. When you talked about meeting the demand safely, I realized that retailers will likely shift left on the demand curve, as the demand for gifts will go down. As for prices, I bet we can expect fair prices on items to drive customers back after the Holiday season because most retail and Christmas goods are elastic items because they can easily be replaced by something else. In this case, people have the trade off of spending a lot on gifts now, or having that money for later when they could possibly need it. I also can put some of my personal experience into the data present because I work in retail and it seems that we get the same people in the store, and some customers we had previously might not be out shopping due to concern with the virus.
ReplyDeleteThis was somewhat shocking but at the same time no different from what I thought was going to happen. I know as another wave of the pandemic cuts through stores are either forced to shut down, limit hours, or limit capacity of people during the holiday season. However, I did not expect Americans budgets to be cut more than half than last year-- that is super surprising and I'm glad you included that information because that provides great insight on what we should all expect. The online shopping rise isn't very surpising to me, at my job our online shopping rates have went up 1000% and even caused our website to crash, so I feel that online shopping probably the "move" this year to ensure safety and efficency for the holidays.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteShopping at malls with friends or family is a holiday staple, but unfortunately, will be decreasing with the current pandemic. I think it is worth noting that the popularity of online shopping was growing even before the pandemic. My family has been using Amazon way before covid to buy Christmas presents, and I know others have as well. Online shopping is convenient and cheaper, compared to normal shopping. An increase in consumers for online shopping has made demand for mall shopping go down. Malls won't even start stocking their shelves with new things, because customers are simply not buying their stuff. The quality of malls will start to diminish, and will continue unless more customers come back. But they won't. I think that after this pandemic, people will continue to online shop. Now that covid has exposed most, if not all, people to online shopping, people will not want to go back. Just look at streaming platforms like Netflix. Once people were exposed to Netflix, buying and renting CDs and movies is not popular anymore. Do you think the same thing will happen with online shopping?
ReplyDeleteI don't think it will impact or reverse any current trends that much, maybe it will accelerate the online shopping trends of the future. As someone whose dad works in reviewing and creating websites FOR online and toys shopping, I say bring it on!
ReplyDelete