Takeaways from Peak 2020
They say that hindsight is 2020, but as we look back over the most recent peak season, the expression takes on a much deeper meaning. From holiday spending to customer sentiment, a lot happened that wasn’t entirely predictable from the 2019 or early 2020 standpoint.
In this post, we’ve broken down some key statistics from the National Retail Federation’s Monthly Economic Review and Consumer Surveys to help you plan for 2021 and beyond.
Holiday Shopping Started Earlier This Year
According to a National Retail Federation (NRF) Consumer Survey, 40% of consumers started their holiday shopping early in 2020. This was seen in the uptick of holiday sales from mid-October to early November prior to the drop off in sales which resulted from a surge in Covid-19 cases over the Thanksgiving holiday.
What This Means
If 2020 becomes a model for future peak seasons, holiday shopping will no longer be confined to the standard November 1st to December 31st period. Instead, it may begin as early as October, with the bulk of holiday purchases being made throughout the month of November. This presents an opportunity for retailers to spread out holiday sales and manage inventory and carriers more strategically during the busiest time of the year.
The Weekly Economic Index (WEI) and Monthly Economic Index (MEI) Trended Upward
While economic growth and mobility in the 2020 peak season remained markedly lower than their 2019 levels, November and December saw an upward pivot in both trend lines. Not only is this a welcome improvement, considering the devastating lows both the WEI and MEI tracked in April, but it also indicates a continued economic rebound that will hopefully carry over in 2021.
What This Means
Since mobility remained relatively low in November and December compared to their pre-pandemic levels, more customers opted to do their shopping online instead of visiting stores in person. This contributed to online shopping growing by 40% YOY from the 2019 holiday season.
This growth in eCommerce shopping is only predicted to continue, as lockdowns and other mobility restrictions continue into early 2021. And assuming eCommerce shopping and fulfillment methods get more convenient over the next few months, customers will likely decide to stick with online shopping experiences even after Covid cases drop and restrictions ease.
As for economic growth, we can only hope that this trend will continue as the economy slowly climbs out of the recession we’ve experienced over the last 11 months.
Retail Sales Exceeded Pre-Pandemic Levels in December
Despite the slowdown in November, retail sales in December still managed to grow 10.5% above NFR’s seasonally adjusted, 3-month moving retail sales average for December of 2019.
What This Means
Though government stimulus checks are by no means a guarantee that economic conditions will improve, we seem to be trending toward more normalized retail spending rates. If this trend continues upward, we will likely see comparable (or increased) spending during the 2021 peak season.
Consumer Sentiment is Low, But Rising
Even with consumer sentiment dropping about 18.7% YOY, per the University of Michigan Consumer Survey, the NRF notes that sentiment is continuing to rise from its previously devastating dip in April and May of 2020.
What This Means
With customers being more skeptical and pessimistic about the economy, it may take months for retail spending to reach normal levels. However, if the December round of stimulus checks bolster the economy, as the NRF predicts it will, the economy may return to a pre-pandemic state by the latter end of 2021.
So, while retail and eCommerce business should still take their cues from Covid infection rates, customer sentiment, and governmental response, we can be cautiously optimistic about the economy in the 2021 peak season.
The 2020 peak season was unique and looking back, there’s a lot we can learn from the consumer behaviors and economic trends we saw in those 3 months. By planning for earlier holiday shopping, embracing online shopping trends, and preparing for fluctuations in retail spending and sales, we can make 2021 a positive and profitable year.
