This year will be the end of Black Friday as we know it, but that’s not necessarily a bad thing…
Simon Property Group and a number of retailers have announced they will not be open on Thanksgiving, which is a big shift from even last year. Over the past decade, stores have pushed their open times earlier and earlier, hour by hour until some were opening at 6 pm on Thanksgiving. With how COVID-19 has changed retail as a whole, it’s no surprise the biggest retail day of the year must change with it.
Shift to Online
Surprising news to absolutely no one, online shopping has increased exponentially this year. eCommerce has already been growing double digits year-over-year, but experts say there has been a 30–40%+ growth since the beginning of this year that may have accelerated eCommerce buy up to five years.
Retailers may be hesitant to take large inventory positions without knowing what the physical turnout will be. There are also serious questions to ask about whether some retailers have the cash to take those inventory positions if they wanted to. While some mass-market big box stores have seen an influx of cash from people stocking up on pandemic supplies, other retailers and brand stores are filing for bankruptcy left and right.
For the big box stores, the doorbuster $100 90” TVs are built to order for Black Friday and holiday sales. Factories overseas, where most of these items are made, are still behind on orders and shipments due to COVID. So there is a question of if these items can be manufactured in time anyways. Apple reportedly had to shift its 2020 iPhone unveiling due to supply chain issues.
Amazon’s Prime Day, normally held in mid-July, has been pushed and rescheduled several times this year due to the ongoing COVID-19 pandemic. It has now been officially rescheduled for October 13–14. Whether it be price matching or their own sales and deals, we can expect other retailers to jump onboard around that same time to compete, as they normally do. There tend to be ongoing price wars when big-ticket items go on sale. Just this past week, Amazon was price matching Staples on Apple Airpod Pros, which resulted in retailers like Walmart to price match as well. This back-and-forth price warring can take days or weeks to settle down until one retailer finally has had enough making a negative margin on the product.
In the last few years, we saw “Countdown to Black Friday” type deals throughout the beginning of November, so with Prime Day being in mid-October, I would expect holiday deals to just keep rolling all the way through to the weeks of Christmas. Black Friday, Cyber Monday, etc. will get their own promotions and call outs, but with all the aforementioned issues with the in-store experience this year, the bulk of promotions will be on the endless digital shelf.
Shipping & Fulfillment Issues
COVID has affected shipping and fulfillment as well. With every warehouse, distribution center, and truck in the supply chain operating under capacity labor wise, orders are taking longer to pack and ship. Almost every eCommerce site I visit has a disclaimer on the product page or at checkout that orders may take longer to than normal ship/arrive. Personally, I rarely if ever have issues with late packages from Amazon, and three of my last five orders have all had their delivery date changed after I placed the order.
In a normal year, all the carriers struggle the weeks before Christmas to make sure packages arrive on time. Even pulling in all available resources, there are delays on packages of all priorities. This year, every distribution center is going to have fewer people working per shift and end delivery trucks may have fewer people on them. While they will be handling a 30–40% increase in packages potentially.
UPS, FedEx, and other carriers had to cap the number of parcels shipped by some companies at the peak of the coronavirus outbreak this summer. Publicly, they stated caps were only implemented for a dozen or so companies who saw surges in shipments. Anecdotally, some companies have said their shipments were capped by 50% and their pickups were regularly being missed by up to a week. With reduced labor and an increased number of packages, I would expect to see equally drastic caps roll out as December comes.
Retailers are aware of these fulfillment issues though, so they’re going to either start promotions earlier or spread them out to avoid massive peaks. With consumer spending remaining relatively stable, there’s no reason to believe that there will be cutbacks on holiday spending at this time. So retailers need to figure out how to get customers to start thinking about holiday presents before Halloween.
For Amazon, this is a big opportunity to dominate holiday shopping this year. While they do rely on USPS for end delivery in rural and remote areas of the United States, they have their own distribution and fulfillment network which could somewhat insulate them from the caps carriers might place on their competitors. Target and Walmart have some upside here as well. Target owns and operates Shipt to provide same-day delivery from stores throughout the country. Walmart has improved its in-store processing as well for same-day orders and ship to store. Smaller retailers and independent stores that haven’t adapted to eCommerce sales may struggle because of this. Reportedly, there are options to have packages delivered through rideshare services like Uber, which could be an interesting opportunity to explore.
Holiday Shopping During a Pandemic
With so much still up in the air about how the next few months will play out, retailers and customers need to be prepared for anything to happen.
Consumer spending has rebounded since May, and people seem eager to go shopping if only for something to do while closures and restrictions are still in place in some states. A reduction in spending on dining out and entertainment could be what’s propping up this spending and may mean even more money on the table this holiday season for retailers. The possibility of another stimulus check is looming on the horizon as well.
The key takeaways are:
- Holiday sales are going to start earlier than ever
- Order early with the expectation of delays
- Be prepared for limited inventory on popular gifts
- Be prepared for changes, good and bad