How retailers are navigating the 2020 holiday shopping season

Refinitiv Director of Consumer Research Jharonne Martis joins Yahoo Finance Live to discuss how COVID-19 is impacting retailers in the 2020 holiday season, and what they’re doing to attract shoppers, and manage demand and supply chains.

Video Transcript

- Let's talk a bit more about what's going on in the retail space ahead of this holiday shopping period. For that, we're joined by Jharonne Martis. She is the Director of Consumer Research over at Refinitiv. And Jharonne, you just heard Brian talking about the lack of traffic in stores, and we also got that slightly disappointing Thanksgiving reading from Adobe. But, I mean, how are you thinking about the holiday period? Have we really actually seen some of those sales pulled forward into the month of November? Is it a year to think less about this you know Thanksgiving weekend kind of data that we know is going to come in in the next couple of days?

JHARONNE MARTIS: Well, it's definitely an unusual Black Friday, like Brian Sozzi just pointed out, and even our data agrees exactly to what he's saying. We're seeing that the department stores, which have been suffering even before the pandemic-- you know, a lot of their merchandise, in fact, about close to 70% of their merchandise, is on sale, Refinitiv discovered in a collaboration with StyleSage, and this is significantly more than it was last year. Right after the mid-tier department stores, the next stores that are suffering the most and half the-- majority of their merchandise on sale are US retail mall stores.

And as a result, we're seeing that they're offering steep discounts in order to move the merchandise and not be stuck with high inventory-- inventory levels. Now, in, terms of November discounts, a lot of the sales are still going to be moved into December. This is not the end of the holiday promotions. In fact, it's just the beginning because in a survey with Maru/Blue Public Opinion, Refinitiv discovered that the bulk of Americans are still procrastinating, despite the fact that it's a pandemic year. Every year we see consumers procrastinate when it comes to holiday shopping, and this will be no exception. So as a result, we're going to see that this is just the beginning of the holiday season. October marked the beginning. November continued, and then we expect this to-- consumers to still shop all the way into Christmas.

- Jharonne, you mentioned the weakness that we've seen in department stores and also stores that are located in malls. This, of course, brings up that bankruptcy question. Are we going to see more of these types of stores filed for bankruptcy over the next year or two because of the underperformance that we've seen right now during the holiday season?

JHARONNE MARTIS: Well, I think it will depend a lot on how soon the vaccine will-- will be released because even the survey-- the survey respondents are telling us that, despite everything, you know, they're very much so concerned about their health and wellness, number one, and they're not planning on-- despite the economy reopening and stores opening for longer hours, they're not planning to go back until a vaccine becomes available.

So as a result, we saw that a lot of the department stores already filed for bankruptcy during the pandemic, and the next batch might be the US retail mall stores, which are following right behind the department stores in terms of the average promotion and also how much of their merchandise is on sale.

- You know, Jharonne, we've seen consumer sentiment really start to soften a bit in the last couple of readings. We've got a bad number from the Conference Board on Tuesday. University of Michigan's wasn't super encouraging on Wednesday. How concerned is that data to you, thinking about where the retailers could go in the first half of next year when a vaccine is going to be rolling out, but maybe we're not getting the full effects of that yet?

JHARONNE MARTIS: So when we look at the retail sales picture, it's important to split it up in two because there's-- it's one picture for brick-and-mortar stores, and it's a completely different picture for e-commerce. E-commerce is definitely stealing a lot of that market share from brick-and-mortar. And for this holiday season, what we saw today with Brian Sozzi-- that's actually the picture for brick-and-mortar, which is they're still going to be empty. A lot of that spending has been substituted by e-commerce, and the bulk of Americans are telling us that that trend of online shopping is here to stay. It's permanent.

They-- they are telling us that despite of a vaccine becoming available and the economy going back to normal, 75% of respondents are still going to continue to shop online because now they've been conditioned to rely on a fast and efficient way of shopping. They know that shopping online is giving them exactly what they want and especially, you know, giving them a safe and contactless way of shopping.

So as a result, we're seeing that that trend is permanent to stay, and as a result, we're seeing that US e-commerce sales grew 29.6% in the first half of the year. And that's expected to continue even further to 43.6% in the second half of the year as per Refinitiv data. And when it comes to brick-and-mortar, on the other hand, we're going to see that those are going to continue to deteriorate, especially this holiday season and probably into the beginning of 2021 as a lot of restaurants are still closed, and a lot of those sales are still moving online.

- Jharonne, real quick, as we wrap this up, we want to ask about the supply chain and inventory issues because going into the holiday season, inventory has been like-- when are you see-- I guess two things. How big of a challenge is this just in terms of inventory management, and when do you see this correcting for retailers?

JHARONNE MARTIS: For brick-and-mortars, it's a huge problem because even today we're seeing that nearly 70% of the merchandise at department stores is on sale, which is more than last year, and over 50%, about 54%, of the merchandise at US mall stores is on sale, which is also higher than usual. So those are the companies that are going to be suffering in terms of inventory, whereas the e-commerce retailers, the ones that have been doing it well, like Nike and Lululemon-- those were-- those inventory levels are flowing at a very good pace.

When it comes to the department stores and the US mall stores, they have a long way to go. It really will depend on the vaccine and how they try to regain a lot of those consumers back because in our latest survey, consumers are telling us that brand loyalty is very important to them. They already have a preconceived notion of where they're going to be shopping this holiday season, and they have a list of the items that-- the shopping list times that they want at this particular store. So as a result, the department stores and US mall stores are a little bit in a problem, in a jam, and they have a lot of work to regain those consumers again.