What September’s retail sales rebound means for the holidays

As the U.S. faces another apparent pandemic surge, a wobbly economy and a national election, uncertainty rules.

In a different year, retailers may have been able to breathe a sigh of relief upon witnessing a healthy sales rebound in September, after enduring months of misery in their top and bottom lines.

But this is a year defined by the COVID-19 pandemic, which has ushered in a recession, undermined employment and disrupted global supply chains. To buy more time, the industry is embarking on the holiday season earlier than ever this year, but, despite the respite evident in September, retailers can’t escape the prevailing challenge of the moment — an unprecedented level of uncertainty.

“September provides a ray of sunshine as we enter the golden quarter and retailers will be hoping the good weather will continue,” GlobalData Retail Managing Director Neil Saunders said in emailed comments. “In our view, the numbers to date show the holidays will not be a disaster. Far from it. However, we caution that there are a lot of unknown variables that could quickly cloud that outlook and completely change the forecast.”

The good news

The pandemic has prevented many U.S. consumers from enjoying their summer the way they like to, with sports, entertainment, travel and dining out (at least indoors) not an option. That has left their bank accounts with more money just as they’re contemplating what to do at the holidays, bolstered in many cases by the government’s $3 trillion pandemic stimulus package.

“In practice, there is still momentum in the consumer economy for several reasons,” Saunders said. “First, a large group of consumers saved their various stimulus payments and so there is a pool of money that is still trickling into retail and boosting spending. Second, a lot of Americans are saving money by not commuting, vacationing and socializing and some of this is being transferred into retail. Third, as the economy continues to open, there is more activity in retail with consumers going out to shops and spending money.”

Through promotions and marketing, retailers are also having some success jump-starting holiday shopping, helped along by Amazon’s delayed Prime Day sales event, Saunders noted. Retailers, or at least some retailers, benefit from all that, and likely did in September, analysts say.

Even apparel, despite yet more year-over-year declines, recovered from earlier months, demonstrating “the strongest August to September gains for clothing retail and department stores, which will be heartening for these retailers despite the figures still being significantly down versus Sept 2019,” Alex Fitzgerald, principal in Kearney’s consumer practice, said in emailed comments.

The holidays could also push shoppers toward new clothes and footwear, according to Coresight Research, which recently ran a 10.10 retail event on Oct. 10. A Coresight survey found that 40.6% of respondents indicated interest in shopping that day and 73.1% indicated interested in shopping on Amazon’s recent Prime Day. Clothing and footwear rose to the top in that research, with 48.8% of respondents saying “they would browse or buy apparel or footwear during the shopping festivals,” according to emailed comments from Coresight CEO Deborah Weinswig.

Content by: https://www.retaildive.com/

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