Today, Monday June 21, 2021, is the first of two Prime Days. People are going to flock to Amazon’s
Restrictions have been lifted in many states (including New York and California), and people are more carefree since they do not have to wear a mask if they have been vaccinated. Retail sales should reflect that optimism since customers will shop as they go out. Certainly, the results noted by Criteo seems to indicate companies are recording significant increases. However, these figures include omnichannel increases which are substantial.
Backing this information is data from Zenreach, which found that foot traffic and in-store visits to retail, restaurant, and entertainment locations have already increased +44% since the start of 2021. (This was recently reported by Sourcing Journal’s Glen Taylor.) In some markets, the gains are even higher.
In contrast, consumer sentiment and behavior were quite different last year when we were in the depths of the pandemic. Sensormatic Solutions in April 2020 reported that customers were concerned about shopping in stores. At that time, the report characterized consumers as follows: concerned (20%), moderately concerned (30%), and very concerned (29%). I guess 21% were not concerned even at that time.
Fast forward one year and the outlook has brightened. Vaccination of the majority of the U.S. population has changed the perception of shoppers and is promoting a shift away from the ‘stay home’ habits formed during the pandemic. What is unknown still is how quickly, and how dramatically, some former habits will re-emerge. Department stores still are indicating that traffic in their stores lags expectations. It has dropped 9.2% for Bloomingdale’s, 17,2% for Macy’s
But the industry is optimistic. The National Retail Federation screams that the retail industry will rebound and enjoy an impressive increase between +10.5% and +13.5%; it expects on-line sales to remain the same as the previous year. Originally, the NRF estimated sales would pick up somewhere between +6.5% and +8.2%. I wish they had not upped their enthusiastic forecast since I do not see quite the same high levels of ‘rush to buy’ continuing. Rather, I could visualize the Christmas buying season reporting only a moderate sales gain in the period that begins at the end of October and ends just before Christmas. The increases we have seen in the first and second quarter this year are comforting and a reflection of the pandemic in retreat, but activity had already started to pick up in the second half of 2020 so this high rate of increase will not be repeated in the second half of the year. After all, those strong sales generated around Prime Days last year will not be anniversaried so easily this year. In other words, I expect more modest increases in the second half of 2021.
There is also the problem of the supply chain. Every retailer is concerned about the flow of merchandise. It is not only a clog at the sea ports, but also the lack of high-volume vessels and a lack of sufficient trucks. Home Depot
Shopping, and shopping in stores again, is definitely getting stronger. Just how strong – and how fast it will come back – remains to be seen.