Muted Holiday Sales Expected but E-Commerce Expectations Remain High
September 15, 2020
Expectations for this Holiday Season
Deloitte expects holiday retail sales to increase between 1.0% and 1.5% compared to 4% during the 2019 holiday season. However, sales will depend on how much high-income consumers spend and could increase up to 2.5% but depending on how much belt-tightening takes place throughout lower-income households, sales could, instead, increase only up to 1.0%.
Not surprising, with many consumers still spending most of their time at home, e-commerce will play a big role during the holiday season. Deloitte expects holiday e-commerce sales to increase 25% -35%, amounting to between $182 billion and $196 billion. That is compared with a 14.7% increase in online spending in 2019 with sales reaching $145 billion.
Consequently, there has been a mad rush for retailers to secure adequate last-mile delivery capacity to ensure delivery. Will last-mile delivery providers be able to deliver on-time? This will be a big question during the holiday season. But, Amazon, FedEx and UPS will have extra help.
Amazon, FedEx and UPS Call for Reinforcements
Amazon announced plans to hire 100,000 workers across North America. This is the fourth hiring spree this year announced by Amazon and according to Dave Clark, senior vice president of worldwide operations at Amazon, the majority of roles will be at the company’s 100 new warehouse and operations sites opening this month. Year-to-date, Amazon has opened 75 new fulfillment, sortation centers, regional air hubs and delivery stations in North America this year.
Meanwhile, FedEx plans to hire 70,000 workers as it gears up for the 2020 holiday season. FedEx has beefed up their hiring throughout the year to reduce delays at various facilities throughout the US.
On the other hand, UPS announced it plans to hire more than 100,000 seasonal employees to handle an anticipated increase in volume beginning in October and continuing through January.
Retailers Prepare for an Unconventional Holiday Season
There are a lot of unknowns as we head into this year’s holiday season. However, many retailers expect a longer holiday season. Home Depot for example plans to extend Black Friday specials for almost two months, rather than take place on a single day. It will also collaborate with Pinterest to encourage DIY projects.
In addition, several retailers including Target, Best Buy, Kohl's and Dick's Sporting Goods announced they would be closed on Thanksgiving Day as they, as well as others, will likely focus on special online sales for Thanksgiving Day and for Black Friday, the traditional start of the holiday season.
As concerns remain high for adequate capacity and positive on-time deliveries, the costs to ship anticipated large volume of goods will be higher than in years past. Many retailers have already had a dismal year and higher holiday shipping costs could prove a tipping point for some.
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