The COVID-19 pandemic– that already shuttered much of the global economy in the first half of 2020 – will continue to impact the year-end sales season as well.
With global experts predicting that the major economies will lose at least 2.4% of their GDP, it is clear that achieving any success would require a different strategy from retailers altogether.
Especially considering the impending holiday season, which starts right after Halloween and continues till New Year Eve. This period usually represents more than half of their annual revenue for a majority of retail businesses.
Smart retailers responded to the economic emergency early on, with a survey concluding 36% of the retailers adjusted their marketplace strategy as early as April 2020. So far, these businesses stuck to online sales till now, and that has worked out nicely for many of them as customers head to e-commerce sites to make purchases.
However, come holiday season, they will face a newer set of challenges. With Coronavirus significantly altering demand, they have to make the most of what is available to turn 2020 into a financially viable year.
In this post, we’ll address some ways that Coronavirus will impact the sales season this year and how merchants can deal with the potential impact of COVID-19 on their holiday sales.
COVID-19: 3 Ways It Will Affect 2020 Sales Season
While there are signs that the Coronavirus might steal the holiday season from retailers this year, it seems that their resilience and resourcefulness may just let them have the sales they’ve wished for.
As lockdown restrictions begin to ease, retailers are picking up pace. The Advance Estimate Report of U.S. Retail and Food Services Sale shows a 17.7% rise in sales in May 2020, which is considerably higher than the retail sales in April.
Let’s look at three ways how the COVID-19 pandemic will influence the year-end sales season:
Customers Are More Inclined Towards Savings
The sharp decline in employment and the sheer uncertainty of the situation has caused many to hold on tight to their wallets and forego shopping for gifts this year. People are cutting costs and plan to keep to themselves this Christmas season, so travel is bound to be affected as well.
This shift in consumer psychology is bound to persist, especially since the risk of a second outbreak of the virus looms above our heads.
Since consumers have started to save their money, businesses that sell non-essential items such as apparel, jewelry, and electronic goods may suffer. If the situation remains the same, such retail businesses will experience a decline in their sales season.
The key is to innovate your business model in order to adapt to the pandemic. Take an ecommerce site, Etsy, for instance. While the core business model of Etsy revolved around selling handmade craft and vintage goods, they adapted to the pandemic by calling on their suppliers to supply face masks.
The result was a roaring success as April 2020 was the highest sales month for the platform since 2015. The verdict is clear: adaptation is key to success in such troubling times.
Disrupted Supply Chains Will Affect Inventories
At the start of the year, it was predicted that the quarantine measures in China would cause disruptions in manufacturing processes – the 2020 sales season will suffer as a result.
However, now, the global interference is seeing further disruptions in the supply chain processes as factories and mills have shut down all over the world.
This has resulted in reduced exports of foreign goods to many countries. Thus, retailers are left with a limited amount of inventory, which can be disastrous for the upcoming sales season.
Shift Towards E-Commerce
Countries rushed to lockdown major economic hubs in order to curb the virus. With no physical stores open, customers were pushed to purse online channels that allowed them to conduct business
This means that store retailers are hard-pressed to shift to online channels to leverage the sales season 2020 – merchants that aren’t selling online have already lost.
Online buyers not only expect more discounts and promotions to entice them, but they’ll also be actively comparing prices to ensure that they get the best value for their money, making it critical for businesses to get the pricing right.
As businesses that were shut down during the lockdown prepare to resume their operations, it is predicted that it will take time for businesses to reach the pre-pandemic normal economic activity level. Moreover, the volatility of unemployment and furloughing rates has caused consumers to save their money for essential items – so they may not be willing to indulge in luxuries during the 2020 sales season. However, the real question is that will retailers even have enough inventories to fulfill the needs of their holiday buyers who do turn up to shop? The rare success stories emerging from the retail scene highlight the importance of adapting to change and tweaking your business model to make the most of the current scenario. So far, only the most robust businesses have survived the economic shock of a pandemic. It seems like this holiday season will be survival of the fittest, as people choose to shop with small and more dynamic retailers. Only time will tell.
To find out how you can properly prepare for the upcoming sales season download our most recent eBook!