Destiny USA Mall Reopens as Coronavirus Disease (COVID-19) Restrictions in Syracuse, New York, USA are relaxed.
Maranie Staab | Reuters
Retailers have experienced nothing less than whiplash this year.
Companies had to close and reopen because of the Coronavirus pandemic. You have coped with a slump in sales and supply chain headaches. They hunted down protective gear and changed policies to reduce the risk of employees and customers contracting Covid-19. They boarded up windows during the George Floyd protestsand more recently in the days leading up to the election.
Now, a day after Election Day, they face yet another threat during the all-important holiday season: Americans who may be distracted or fearful waiting for results.
president Donald Trump and democratic candidate Joe Biden stay in tight races in key swing states, including Pennsylvania and Michigan, according to NBC. A winner has not yet been announced and consumers and businesses are waiting for answers on who will run the country and shape economic policy.
This could hurt consumer confidence as retailers try to capitalize on the gift giving season.
Greg Portell, a lead partner in the global consumer practice at Kearney, a strategy and management consultancy, said the delayed results would “absolutely disrupt consumer spending.”
“Consumers spent a huge amount of money getting out of locks,” he said. “We had a great Christmas season ahead of us. All of this will be suspended until we see clarity about who will win.”
If history is a guide, at least a temporary drop in spending is likely. According to a recent study from Adobe Analytics, which tracks the web transactions of 80 of the top 100 internet retailers in the US.
Adobe found that online sales fell 14% the day after the 2016 election when Trump was elected to office. They fell 6% the day after 2018 halftime.
Meanwhile, 26% of consumers said the presidential election outcome would affect their vacation spending, as Adobe found when it polled 1,000 US consumers last month. And 63% of retailers told Adobe that they expect Americans to be more confident about their spending after the election.
“If we don’t shut down and the election results actually take longer than the traditional evening or the morning of the next day, then we may see a hangover and pause right there,” said Jason Woosley. Vice President, Commercial Products and Platforms, Adobe.
The ongoing vote count has also increased the possibility of a court battle or civil unrest – a concern that has caused retailers in major cities like Washington, DC and New York City to open their windows.
Early Wednesday, Trump falsely claimed he won the election and said he would go to the US Supreme Court to “stop all votes”.
Kearneys Portell said there is a particularly heightened “passion” among both Republicans and Democrats in the 2020 election, with some people feeling like they are facing a “massive cliff” if their party loses. And that could lead to possible rioting and looting after the official winner was named, he said.
“If we get into a period of civil unrest, consumer spending will stop and we will have a terrible holiday season,” Portell said.
Even if Biden or Trump are soon declared the winner, enthusiasm for vacation spending may be subdued due to election impact, said Mark Cohen, director of retail studies at Columbia Business School. He said he expected Christmas sales to be the same or lower from previous years.
“Retailing requires a certain amount of calm on the part of consumers, who can take the time to enjoy the vacation and take their attention away from things that are driving them crazy,” he said. “100% of this country is probably feeling a little crazy right now and if this is finally decided in the next few days or weeks, 50% of this country will be in a state of anger.”
Plus, retailers would continue to grapple with rising Covid-19 cases and how it could disrupt the way Americans shop or partying. The US registered an additional 91,500 new cases of the coronavirus on Tuesday. the second highest one-day balance to dateaccording to the Johns Hopkins University. The 7-day average of the daily new cases is now 86,362 – 20% higher than last week.
“Covid is the insidious, invisible element that covers more or less everything that will happen on this holiday,” he said.
Americans have showed that they still enjoy shoppingEven if coronavirus cases increase and many remain unemployed. Retail sales have been recovering since May and May rose over 1.9% in September, higher than expected by economists polled by Dow Jones. Clothing and accessories rose 11%, followed by sporting goods, music and books, which grew 5.7%.
Matt Shay, President and CEO of the National Retail Federation, expects the October numbers to continue this trend. He is confident that retail sales will continue to recover.
“There is general consensus that we will work this through,” he said. “The unemployment rate is falling.”
The unemployment rate was 7.9% in September, according to the US Labor Office. According to Refinitiv, this corresponds to around 12.6 million people.
“Historically, political events can be a little distracting, but consumers have an opportunity to separate what is happening in the political world from the way they lead their daily lives,” Shay said.
Still, pandemic-related trends have widened the gap between winners and losers in retail.
Some like big box stores like target and hardware stores like Lowes, have seen tremendous sales increases as they benefit from Americans cooking at home, spending money they would otherwise have spent on vacation, and buying puzzles or bicycles to pass the time. A growing list of others – by J.C. Penney to J.Crew – did, however Filed for bankruptcy protection and announced layoffs and store closings.
Even retailers with strong pandemic sales like Walmart, have refused to provide projections for the year and have given an uncertain future due to factors such as government incentives.
NRF hasn’t released a vacation forecast yet, but its survey of 7,660 consumers in early October found they were planning to spend an average of $ 997.79 on gifts and holiday items such as food and decorations. That’s a decrease of nearly $ 50 from last year.
According to Cohen, rising retail sales in the second half of this year obscure a more complicated picture: those sales are concentrated in large stores and grocers as the stores in malls are struggling. Millions of Americans are still unemployed, and whether Trump or Biden win, the president will likely lead a divided government that makes it difficult to conclude a business cycle agreement for consumers or businesses.
“We are a broken society at the moment and will remain so for the foreseeable future,” said Cohen. “And retail, which is the heart and soul of our vaunted economy, will be a victim of it.”