CBRE forecasts just a 1.5% rise in holiday sales this year
The average 4.1% rise in holiday sales that was posted since 2010 will cool down precipitously to just 1.5% this year, according to CBRE’s just-released report, “A Holiday Shopping Season Like No Other.” The final tally predicted by the global real estate services company is $741.2 billion.
The slower pace will be due to less shopping activity at brick-and-mortar locations. Meanwhile, e-commerce retail operations will claim 40% of all purchases in 2020—a huge leap ahead of the 14% they claimed in 2019. That means online holiday sales of $168 billion last year will turn into $235 billion-worth this year.
“For the last 10 years, online sellers charted about the same pace of growth, but that pace has doubled in the last six months. More people have now learned to use e-coms to purchase essentials as well as non-essentials,” said John Morris, CBRE’s retail leader and executive managing director of Industrial and Logistics.
Other things CBRE predicts to come into play this holiday season:
Apparel sales will not see much of a rebound. Social distancing will cancel traditional holiday parties and decrease demand for party dresses, evening wear, and tailored garments. The company’s research staff also expects weak sales of electronics following a pandemic-influenced surge in sales of home office equipment, entertainment programs, and remote learning aids during the summer.
The holiday shopping timeline will be extended. The five days of door-buster sales that have begun on Black Friday won’t make much impact this year. Amazon’s Prime Day has been moved to October 13 and 14 and, as a result, major brick-and-mortar retailers will start their holiday product sales at the same time. “The effort to spread sales and promotions over a longer period is also meant to address some inventory shortages brought about by the pandemic,” said Meghann Martindale, CBRE’s global head of retail research. “This will be the longest holiday season ever seen."
“In-and-out” shopping will be the norm in most centers. This term is now commonly in play in all sectors of brick-and-mortar shopping as retailers attempt to have customers engage with sales associates in stores and do everything else outside. Vacant retail spaces, kiosks, common areas, and outdoor space on sidewalks and in parking lots will be used for payment, purchase of gift cards, gift wrapping, and returns. “This will be especially prevalent in smaller stores 2,000 sq. ft. and under,” Martindale said.
Morris believes that online retail’s heightened profile will endure beyond the span of the COVID-19 crisis and that brick-and-mortar retailers who aren’t rebuilding their operations for a new omnichannel age will pay a price.
“Becoming an omnichannel retailer is more challenging and requires more working capital. Online product fulfillment is 10 to 15 more times expensive than delivering pallets to stores on a truck,” Morris said. “You have to carefully manage that piece of the supply chain to even break even in e-commerce, so smart physical retailers will find dedicated, outsourced logistics partners to take care of fulfillment.”