Analysis: September Sales Bode Well For Holidays

September retail sales results hold positive prospects for the holiday season, according to Deborah Weinswig, CEO and founder of Coresight Research and Alex Fitzgerald, a principal in the consumer practice at Kearney, a global management consulting firm.

According to Fitzgerald, the September numbers included an encouraging gain in apparel and department store sales, which are important to holiday results, even if electronics and apparel results were soft. Overall, the September numbers arrive as good tidings for the end of the year, she determined.

“The release of these numbers is especially relevant as retailers are in the midst of scenario planning for holiday 2020 and many third-party consumer surveys are suggesting that consumers plan to spend less,” Fitzgerald said. “This provides another, more optimistic data point for the retailers to triangulate against.”

Still, Fitzgerald noted, “a great deal of uncertainty exists, with the overall financial security of the consumer as well as the virus itself. For retailers, this uncertainty rests on the importance of the holiday shopping season, which has already started. It was kicked off by Prime Day, and other retailers followed suit. The extended deal season means that retailers offering multiple sales can test the market and learn from them iteratively. Retailers will have a lot to iron out in the coming months with returns, curbside pickup and other COVID-related consumer demands.”

Weinswig observed, “Looking at retail sales, growth numbers are solid. They’re even better when you take out food service and drinking places. The numbers are broadly in line with what we have seen from our U.S. Internet user consumer surveys: 52.2% of our U.S. survey respondents reported that they have still been avoiding restaurants and coffee shops, relatively steady with the values we were seeing a month ago. However, we do see that 28.4% of respondents indicated they plan to go out to eat or drink within the next two weeks, potentially signaling a strong bounce back for restaurants and bars in October.”

At the same time, consumers are increasingly trying and in some cases embracing online grocery shopping, which could have at least mid-term and possibly long-term effects.

“In our research,” Weinswig said, “31% of survey respondents bought online groceries in the past two weeks, roughly in line with the 29.4% who reported doing so in mid-June, indicating that people who switched to grocery shopping online during the pandemic haven’t gone back to their old ways. Further, 33.9% of respondents indicated they are spending more on food and non-alcoholic beverages now than before the crisis, compared to just 4.6% saying they are spending less on this category.”

Weinswig pointed out that shopping events, such as the Coresight-sponsored 10.10 Shopping Festival and Prime Day, are having an influence on holiday shopping trends. At the same time, established trends continue to see momentum.

She noted, “The home improvement and gardening craze isn’t over, and home improvement retailers can capitalize on buy online, pickup in-store to continue to boost sales this holiday season. Building material and gardening equipment were up 19% year-over-year and up 0.6% month-over month, both based on seasonally adjusted figures. Home improvement retailers should continue to lean into BOPIS to capitalize on this craze: For example, Home Depot in the most recent quarter saw digital sales increase 100%, with 60% of those BOPIS or home delivery orders fulfilled by stores.”