With concerns about the Delta variant still on the rise and the COVID-19 pandemic continuing to disrupt economies across the world, an increase in retail sales may seem not only unexpected but also a great achievement for any economy. However, US retail sales were up 0.7% in September and, with the holiday season just around the corner, the trend is now expected to last at least until the end of the year. The fact that American consumers spent more than expected in September has made business leaders and analysts more optimistic about the economic recovery, pointing to a brighter future despite the COVID-19 crisis.
Factoring in these results, it is worth noting that a true economic recovery depends on multiple factors, including the progression of the COVID-19 pandemic in the following months. But while it may be challenging to predict future developments in the healthcare crisis and the state of the economy, the same cannot be said about retail. It remains to be seen whether the increase in sales will prove strong enough to boost economic recovery, or if the other circumstances influencing the market will ultimately prevent this growth cycle from taking off. Until then, retail sales will probably continue to rise in the following months as retailers start taking all the necessary precautions to maintain their growth.
Large Retailers Have Already Started to Prepare
As the pandemic continues to disrupt various industries and supply chains across the world, American consumers are faced with the possibility of spending their holidays without some of their favorite products. To avoid such a sorry state of affairs, retailers have already started to take action to overcome supply chain shortages, while also encouraging early shopping among their customers. As congested ports, an overwhelmed trucking industry, labor shortages, high demand for certain products, and rising shipping costs are all impacting the flow of goods, many Americans may quickly adopt early shopping.
Moreover, large retailers also seem to have decided to extend the biggest shopping day of the year over the course of several weeks, if not months. Amazon, Nordstrom, Kohl’s, and many others have already announced early Black Friday sales starting in October as a new way of boosting early shopping and avoiding supply chain delays. Other retailers have decided to handle the disruption to global supply chains differently and bypassed the system altogether. According to The Wall Street Journal, retailers like Home Depot, Costco, and Walmart decided to employ their own private charters to bring their goods home in time for the holidays.
Unprecedented Actions for Unprecedented Demand
While US retailers have undoubtedly resorted to unprecedented actions to overcome the multiple supply chain obstacles ahead, the future of retail sales ultimately depends on the customers. According to a new Accenture study, consumers are not only looking forward to this holiday season, but many are also planning to spend more on their holiday shopping than they did in 2020. 76% of the consumers questioned by Accenture said they plan to spend the holidays with their loved ones, while 75% already intended to buy gifts for their immediate family. Perhaps even more important is that 41% said they would also buy presents for their neighbors, colleagues, and friends.
The Accenture report also suggests that many consumers are worried about the problems plaguing the supply and transportation of goods—with 34% of shoppers planning to buy their products earlier this season to make sure they will arrive in time for the holidays. Furthermore, only 22% of those questioned said they plan to buy most of their goods on Black Friday and Cyber Monday. According to the data, there is a fundamental disconnect between customers and brands when it comes to these two days. This is reflected in the 42% of retail executives who took part in a related Accenture study that expect customers to make most purchases on Black Friday and Cyber Monday.
While many customers will probably decide against shopping on Black Friday this year as its popularity seems to be declining, retail sales will likely continue to rise in October. Large retailers are not only encouraging early shopping, but they are also taking unprecedented actions to keep up with the growing demand. This is fortunate as customers seem more willing to spend their earnings on holiday products and gifts than ever before, and they are also planning to start their shopping early.
