Millions of Americans are jobless, dozens of retailers have gone bust and COVID-19 continues to shadow in-store shopping. Time to cancel the holidays?
Not quite. Sales this holiday season, a key period for merchants around the U.S., are expected to grow between 1% and 1.5% this year, resulting in up to $1.2 trillion in overall holiday spending, according to consulting firm Deloitte. Not surprisingly, high-earning households are expected to drive that sales growth.
The wealthy are expected to grow sales by between 2.5% and 3%, according to Deloitte. Savings from reduced spending on restaurants, travel and other experiences that consumers currently deem unsafe due to the coronavirus could also help buoy gift-giving, Deloitte noted.
"Those folks who kept working through the shutdown will have a good holiday season," Rod Sides, vice chairman of U.S. retail and distribution at Deloitte, told CBS MoneyWatch.
By contrast, lower-wage workers whose hours were reduced or who lost their jobs are expected to pull back on gift-giving, with spending in this group expected to be fairly.
"At the lower end of the economy, among families with $50,000 and below in disposable income, a lot of folks were severely impacted by shutdowns and cutbacks. We think for them it's going to be a slower recovery and some households won't spend as much as they did last year," Sides said.
Online sales are expected to grow between 25% and 30% and account for nearly 17% of total retail sales this year, according to Deloitte.
Marshal Cohen, chief retail advisor at market research firm NPD Group, expects sales to grow between 2.5% and 3.2% during this year's extended holiday season, which will begin in October and last until mid-January.
"Is Santa Claus going to show up this year? The answer is yes," Cohen told CBS MoneyWatch.
"The good news is consumers continually show up, no matter what we throw them. Holiday-time resilience is always there," Cohen added. Tangible gifts may be more popular this year given that gifts like travel and spa visits are largely off the table, he said.
"Grandma won't go to visit family, so she will send a gift — and spend more than what she normally would because she's not spending money on airfare, so she has more money to spend," Cohen said.
Count on seeing booming sales in consumer electronics this year, too, as Americans look to upgrade the technology that allows them to work — and entertain — at home.
"Looking past the emotional part of it, the key driver here is the at-home lifestyle we are living. We have got to find ways to keep ourselves busy, our family busy. And if we work at home, we need to upgrade our tech," Cohen said.
To that end, the stay-at-home lifestyle is expected to fuel 18% growth in consumer technology sales from October through December, according to NPD group. Consumer tech sales grew 4% during the same period one year ago.
"Really, what we've identified in terms of this trend is the COVID situation has kicked off an upgrade cycle in terms of technology in people's homes. People are not going to the movies as often or on vacations, and instead their money is being spent on a new TV or a new computer or gaming system," said Ben Arnold, consumer technology analyst at NPD Group.
Expect this year's holiday shopping season to kick off in October and extend through mid-January, Shopping early will be key in order to purchase preferred items and guarantee on-time delivery as more shopping moves online, according to experts.
"With the constraint on e-commerce and delivery and a lot of shopping going online, there needs to be a way of getting things to people in a timely way. So, shopping in October is a good idea," said Deborah Weinswig, founder and CEO of Coresight research, a retail and technology research firm.
The influx of online orders could very well overwhelm parcel carriers. "There is going to be a point where you as a consumer will not be guaranteed delivery by the 23-24 of December," Weinswig added.
Inventory will be limited, too, particularly in popular categories such as consumer electronics, which could even curb sales.
Pushing seasonal demand earlier to October could be the best way to save the holiday for consumers and retailers alike, according to Weinswig."We are going to be incredibly challenged to get product to consumers this holiday season if we are on a traditional calendar," Weinswig said. "We think delivery will be challenged and whatever can be done to pull this forward will absolutely save Christmas in more ways than one."
