2020 Holiday Shopping Season: Boom or Bust?

Retailers have a lot of ground to make up in the all-important holiday shopping season.

The COVID-19 pandemic has ravaged many businesses’ top and bottom lines. Small businesses across the country have closed their doors permanently. According to Yelp, nearly 100,000 businesses were lost during the pandemic.[1] And those businesses, especially retailers, that have reopened amidst all the new restrictions are hoping to make up a lot of ground in the final weeks of 2020.

But, with a more cautious U.S. consumer, it’s an uphill climb for the majority of retailers.

The Commerce Department recently revealed that U.S. retail sales only grew 0.3% in October, down from 1.6% in September. As you can see in the chart below,[2] Americans have grown a bit more cautious with their spending in recent months—and that has many economists’ wondering if the 2020 holiday shopping season will be a boom or a bust.

Many big-name retailers like Amazon (AMZN), Walmart (WMT), and Target (TGT) introduced holiday savings deals well before the big Thanksgiving shopping weekend. All three of these companies introduced holiday deals in October. Based on October retail sales, these early deals did little to inspire Americans to open their wallets.

However, with that said, it appears that Americans are starting to feel the holiday spirit.

Black Friday and Cyber Monday were both record-setting online-shopping days. According to Adobe Analytics, online shopping on Black Friday soared 22% year-over-year to $9 billion. Cyber Monday sales increased 15% year-over-year to $10.8 billion. So, Cyber Monday and Black Friday were the two biggest days for online shopping in U.S. history.

With the vast majority of Americans turning to online shopping this year—more than 100 million on Black Friday[3]—there was a marked drop-off in the number of people actually in stores on Black Friday. The National Retail Federation revealed in-store shoppers on Black Friday plunged 37% year-over-year.

Overall, more than 186 million people took to the stores or made purchases online from Thanksgiving through Cyber Monday, and they spent an average of $312. That’s down from 189.6 million shoppers in 2019 and 14% less than Americans spent in 2019. Interestingly, though, there were more shoppers during this five-day shopping spree in 2020 than in 2018 (165.8 million), and purchases were in-line with the amount consumers spent in 2018, too.

Tucked in between Black Friday and Cyber Monday, Small Business Saturday garnered a bit of attention this year, as many Americans made the conscious decision to support local businesses. About 68 million people made purchases on Small Business Saturday, which represented a 17% year-over-year increase.[3]

So, while Americans are more cautious this year and do the bulk of their shopping online, it may still be a joyous season for some retailers. The National Retail Federation expects holiday retail sales between November and December to increase between 3.6% and 5.2% year-over-year, or between $755.3 billion and $766.7 billion.

[1] https://www.wsj.com/articles/number-of-black-friday-in-store-shoppers-fell-37-11606841884?mod=searchresults_pos2&page=1

[2] https://www.cnbc.com/2020/12/01/black-friday-weekend-shopping-and-spending-drop-as-sales-season-starts-early-national-retail-federation-says.html

[3] https://fortune.com/2020/09/28/covid-buisnesses-shut-down-closed/

[4] https://tradingeconomics.com/united-states/retail-sales