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Coronavirus prompts Amazon, other retailers to push online holiday sales early

Amazon.com Inc. and other retailers are starting their holiday selling season earlier than usual this year, a move experts say will help lock in online sales from budget-conscious consumers still cautious during the coronavirus crisis and reduce supply-chain bottlenecks during the crucial fourth quarter.

Historically, the holiday season kicks off on Black Friday, the day after Thanksgiving, when consumers typically form long lines outside stores for door-buster deals on toys, electronics and other in-demand merchandise.

But the mid-October events are part of an effort by the retailers to persuade millions of consumers to buy merchandise — sooner rather than later— even as consumers scale back on spending, holiday gatherings and travel amid the pandemic and a weak economy. U.S. holiday sales between November and January are expected to increase between 1% and 1.5% to between $1.147 trillion and $1.152 trillion, according to Deloitte's holiday forecast. That figure represents a slowdown from 2019 holiday sales, which rose 4.1% $1.14 trillion.

"It's not all about Black Friday anymore or Cyber Monday," said Stephen Rector, president of Bakertown Consulting in New York and a former executive with Macy's Inc., in an interview. "You're going to see deals weekly until Christmas."

Amazon is leading the charge with its Prime Day sales event Oct. 13-14, hoping to entice consumers with deals on items ranging from smart home appliances, furniture and fashion. The marquee event, typically held in July, is expected to generate $9.91 billion in sales worldwide, up from $6.93 billion in 2019, according to eMarketer.

The 48-hour promotion coincides with Target Corp.'s Deal Days online shopping event on Oct. 13-14, offering nearly 1 million more deals than last year and "Black Friday pricing" throughout November. Jake Anderson, a spokesperson for Target, said items must be purchased online but can be picked up in-store or delivered via curbside pickup.

Best Buy Co. Inc.'s Oct. 13-14 sales will feature dozens of deals both online and in-store, including a $529.99 70-inch Samsung 4K smart TV. Walmart Inc. seeks to preempt them all with its "Big Save" online-only sales event that Oct. 11-15.

SNL ImageRetailers including Walmart, Amazon and Target are holding sales events well before Halloween to give cautious shoppers more time to purchase gifts and alleviate stress on their supply chains.
Source: Walmart

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis anytime here.

Spending shift

Retailers will be chasing sales during a holiday season when millions of Americans remain unemployed and concerns about the economy and pandemic remain high.

The season will likely get a boost from higher-income consumers who have been able to save money for holiday gifts, Julia Pollak, a labor economist with ZipRecruiter, said in an interview. "High-income Americans have not been able to go on vacation, get their nails done or purchase any of the services that they used to do, so they are sitting on a pool of cash," Pollak said.

Consumers who do spend are likely to buy up gifts they have focused on during the pandemic: household products, home electronics, exercise equipment, toys, and athleisure, said Stacy DeBroff, CEO of Influence Central, a social and digital consultancy. "The gifting and the celebrations are going to become even more poignant to have something to sort of go around" during a holiday season that will mean fewer gatherings at both Thanksgiving and Christmas, she said.

That shift is likely to reward retailers in the home improvement, electronics and athletic sectors, including Home Depot Inc., Lowe's Cos. Inc., Best Buy and Nike Inc., all of which have seen a lift in e-commerce sales amid the pandemic. Global e-commerce transaction volume is expected to reach $4.16 trillion in 2020, up 23% from $3.38 trillion in 2019 and $2.79 trillion in 2018, according to 451 Research, an offering of S&P Global Market Intelligence.

"Those merchants that are prepared to handle spikes in volume for e-commerce websites, that had the infrastructure in place to deliver on some of those omnichannel use cases, are going to be positioned more attractively to consumers," Jordan McKee, research director at 451 Research, said in an interview. "There is a decent amount of opportunity for them to capture sales that would have otherwise gone to their competitors that don't have those capabilities."

SNL Image

Meanwhile, lower-income consumers will likely spend less overall as they look to save their dollars. According to the National Bureau of Economic Research, most U.S. households either saved their stimulus payments or used them to pay down debt, with only about 40% of households reporting that they spent the money. Expanded unemployment benefits also boosted savings rates, Pollak of ZipRecruiter said.

The holiday season could get a boost if U.S. lawmakers pass another stimulus package that includes a second round of payments to consumers, but it is unclear if that will happen as negotiations have come to an impasse, Pollak said. "We may not see any more stimulus until after Jan. 20," she said.

Holiday hiring spree

The coronavirus-induced uptick in e-commerce sales has placed immense pressure on the retail industry's supply chain. But the major retailers are working to reduce that strain by hiring armies of logistics workers to ensure items ordered online arrive on time for the holidays.

Amazon said in September that it would hire 100,000 fulfillment and logistics workers to help handle e-commerce demand, including warehouse and operations. That's on top of hiring that took place during the early days of the pandemic. Amazon did not respond to inquiries about how the new workers will help it manage holiday sales. Still, experts say the expanded workforce will behoove the e-commerce giant as it works to get its one-day delivery program back to pre-pandemic levels.

"By having the events spread out over a longer course of time, it alleviates the pressure of getting the goods to consumers in time for the actual holiday," said Rector of Bakertown Consulting. "You're not going to have that mad rush at the last minute.”

Meanwhile, Walmart also is gearing up for the holidays by hiring more than 20,000 seasonal workers in its e-commerce warehouses across the U.S. while Target is doubling the number of seasonal store staff dedicated to same-day curbside and in-store pickups of online purchases throughout the season.

SNL ImageTarget is emphasizing various options on how to receive items this holiday season, including buy online, pick up in store and curbside pickup.
Source: Target

Walmart and Target did not return inquiries seeking comment. But emphasizing how shoppers can receive an item this holiday season will be key to enticing consumers who are not only strapped for time but also more risk-tolerant as they limit time spent in stores, said Scott Lachut, president of research and strategy at PSFK, a retail and consumer experience research firm.

"If they can do 90% of their shopping trip through buy online pickup in-store, then they can take the limited time that they either have or are willing to spend in the store and do more browsing and discovery moments there," Lachut said in an interview. "You can capitalize on bringing a consumer into the store and then give them the opportunity to add to their shopping cart."