Revenge Of The Shoppers: Holiday Sales Once Again Look Bright

At last, a post-pandemic “new normal” (whatever that actually means of course) could be on the horizon. After months of quarantining, travel restrictions, and avoiding large gatherings – consumers, and the economy, are starting to return to typical levels of activity. According to JLL’s JLL comeback indicator, the U.S. economy is on the verge of being 75 percent back to typical levels. For consumers, Morning Consult surveys indicate that 64 percent once again feeling comfortable visiting a mall – which is reflected in data from PlacerAI showing that suburban shopping centers and malls are close to a full rebound in terms of foot traffic.    

Between the lack of commuting costs, multiple stimulus checks, PPP loans, deferred student loan payments and lowered spending on dining out and other leisure activities, many Americans hoarded cash throughout 2020 and 2021. We have a long way to go to reach herd immunity and put COVID-19 in the rearview mirror, but now that we are tiptoeing within six feet of each other again, consumers who saved money are eagerly eyeing how they’ll spend it. Retail sales surged in October for their largest gain since March and are 21.4 percent above their pre-pandemic level.

While vaccines were approved in late 2020 they were not widely accessible until spring 2021, leaving many holiday festivities to be held virtually, or not at all. All of this isolation left many of us devoid of the feeling of a collective belonging – creating a pent-up need for interaction that has never been stronger.

As the axiom goes, you don’t appreciate what you have until it’s gone and that’s exactly how many feel as this year’s holiday season approaches. It’s been nearly two years since holidays were not met with significant hesitation, and this year, consumers are ready.

Happy holidays, happy retailers

Now that we are gearing up for some semblance of normalcy during the holidays, consumers plan to roll back into stores with a vengeance. Pre-pandemic, the typical holiday shopper spent $874 in the United States according to JLL’s annual holiday survey results.

This plunged to $694 last year. Holidays previously meant purchasing gifts for siblings, parents, aunts, uncles, cousins, friends, coworkers, pets, teachers or anyone in the community who you regularly encountered. But stripped of these interactions in 2020, along with great uncertainty about a pending vaccine, normal holiday spending was put on the backburner.

For many, the lowered holiday shopping price tag wasn’t due to a lack of family interactions. It was due to a depleted purchasing power. Service, retail and hospitality jobs dried up when people stayed home, leaving millions of people out of work and unable to spend as much on gifts, decorations and holiday activities in 2020.

This year already looks different. Our survey respondents indicated plans to spend on average 25.4 percent more this year compared to last year, translating to nearly $200 more per person in 2021. Shoppers are willing to spend their hard-earned cash from nearly two years spent at home.

And retailers are taking note. The steady rise in spending over the last few months gives hope that the holiday season will significantly bolster sales for the year. Considering many retailers rely heavily on the last few months of the year to reach their sales targets, bright spots are becoming more visible.

Online buyers beware?

Most consumers are taking supply chain disruptions into consideration and planning ahead this season. More than half of shoppers will start shopping before Thanksgiving (compared to 43.2 percent last year) while another 36.3 percent will start 2-4 weeks before Christmas. A small number of shoppers—roughly 4 percent—will wait until the week before Christmas.

Another 60.1 percent of shoppers will order online from an internet-only retailer, but more plan to do some form of shopping outside the home: 58 percent plan to shop in stores, 34 percent will buy online, pick up in-store (BOPIS) and 22.6 percent will take advantage of curbside pickup.

In person shopping may be the surest way for consumers to guarantee they’ll receive their items by the holidays in anticipation of major shipping delays spawning out of congested ports. However, there is no guarantee some products will even make it to point of sale. According to data from Adobe Analytics, online out-of-stock messages are forecasted to be up 172 percent this season compared to 2020, and up 360 percent on a two-year basis. The analysts expect that apparel will have the highest out-of-stock levels, followed by sporting goods, baby products and electronics.

As a result, retailers are encouraging shoppers to buy fast and buy now. But the supply chain crises may inadvertently bring forth a separate set of advantages. After all, early buying encourages more spending overall, a phenomenon that has had retailers pushing holiday deals earlier every year long before the pandemic. 

So will the supply chain actually impact overall holiday retail sales? Only January ’22 can answer that, but the outlook is positive. The National Retail Federation is forecasting holiday sales during November and December to rise between 8.5 percent and 10.5 percent, for a total of between $843.4 billion and $859 billion of sales.

Self-gifting becomes self-care

As public health stormed to the forefront of global conversations, so did mental health. Loneliness, travel restrictions and the avoidance of friends and family members for health and safety reasons caused massive reporting of isolation and resulting loneliness.

As options to socialize were limited, people turned inward to find solutions to solitude in the form of self-care by simply prioritizing oneself through relaxing hobbies or activities like yoga and meditation.

This mindset bled into purchasing habits as well. This year, JLL anticipates self-gifting, or the act of purchasing yourself a gift for the holidays will rise, and apparel is a likely contender. Over 70 percent of shoppers plan to self-gift this year, with clothing and shoes being the top category, accounting for 47.6 percent of shoppers. Just recently the U.S. Census Bureau reported that September 2021 retail sales showed that the apparel category saw a 22 percent YOY increase since 2020.

And apparel retailers are ready for growth, with many expanding their brick-and-mortar footprints anticipating a strong Black Friday through the new year. Both Ross and Windsor Fashions announced 28 new store locations by the end of 2021, Scotch and Soda also announced another 22 physical stores, and Allbirds just opened their first store in Denver.

Could the spike in demand for apparel be a bellwether for urban corridors? Retail is a trailing asset class after all, a product of what’s happening around it. Urban corridors and business districts are both largely driven by daytime populations, disproportionately impacting them. More consumers are returning to work, swapping their sweatpants for slacks; wedding season has morphed from a few months to the entire year; and vacationers are no longer so readily accepting of reschedules. As the foot traffic from tourism and the workforce returns to full capacity, I anticipate a strong retail rebound across lagging submarkets, like Times Square for example, and am forecasting demand at physical retail to grow as “revenge shopping” from months of pent-up demand to be out of the home takes hold this holiday season.