If we’ve learned anything over the last couple weeks, it’s that COVID-19 isn’t going anywhere. Omicron is the newest variant as it follows in the footsteps of the alpha, beta, gamma, and delta coronavirus strains. Just like other strains, omicron didn’t start in the US, but is making its way here if it hasn’t already.
Many of us have a handle on the health and safety protocols needed to protect ourselves from COVID-related risks, but retailers have continued to adapt and regain ground lost during the last 18 months. Lockdowns, mask and vaccine mandates, and store restrictions have all put retailers in uncomfortable positions, but many have overcome these hurdles exceedingly well.
2020 was undoubtedly worse than 2021 for brick-and-mortar, yet in-store purchases remain significantly lower than 2019 levels. However, retailers have met standards and even exceeded expectations by creating robust e-commerce operations.
Analyzing this year’s holiday season and Black Friday purchasing habits will give us a good idea where we’re headed in 2022 and beyond.
Retailers will need to find their own path forward
Since March 2020, consumer expectations have changed and that’s forced retailers to act accordingly. E-commerce sales in 2020 were 32.4% higher than they were in 2019, and a continuation of the pandemic will only keep this percentage point up.
Brands put time and resources into reinventing themselves to adapt to consumer habits, which meant adopting direct-to-consumer solutions, nontraditional shopping channels, buy now, pay later services, and omnichannel strategies.
For retailers like Nike and Under Armour, this meant exiting thousands of their wholesale doors while accelerating their DTC strategy. Under Armour’s e-commerce sales skyrocketed to $540 million last fall—a more than 50% increase from 2019 numbers.
But many will need to find their own path forward, as finding the right balance between online and in-store offerings won’t always be easy when restrictions, mandates, and pandemic-related protocols change on a dime.
More than 18 months into the pandemic, retail giants like Target, Walmart, and Best Buy will look to use what they’ve learned about consumer habits to maximize spending this holiday season.
Black Friday was a mixed bag
Holiday shopping started long before Black Friday this year as supply chain delays and decisive product sales as early as September and October put consumers in a unique situation.
Fall sales, buy now, pay later services, and the emergence of nontraditional shopping channels made it easier for consumers to make holiday purchases before the season kicked off, but Black Friday and Cyber Monday certainly had an effect on seasonal shopping habits.
Over the weekend, roughly 105 million shoppers visited brick-and-mortar stores—a considerable uptick from last year’s 92 million. Further, the number of online shoppers went down to 128 million from last year’s 145 million.
Matthew Shay, National Retail Federation’s (NRF) president and CEO stated on Tuesday: “We all enjoy the tradition of enjoying things in person and in-store shopping as a symbolic kickoff to holiday season—and [shoppers] missed that in many cases last year… People are tired of doing things remotely and on stream and doing things virtually. They would like to be together doing those things in person.”
There is, however, evidence that online shopping isn’t slowing down anytime soon. Adobe reported this weekend that consumers spent nearly $110 billion online throughout November, a 12% increase from last year.
Supply chain delays made it difficult for any retailer to stay 100% stocked, but JLL’s CEO Greg Maloney argued that the whole situation is somewhat overblown.
“[Consumers] are not rushing out to get something unless it’s a hot toy or one electronic… but beyond that it’s not a big thing for a lot of people,” he said.
Going further into the holiday season, retail thought leaders like Shay have a lot of confidence that consumers will continue to act as the backbone for the economy during the last quarter of the year.
Omicron will affect holiday spending
Just as retailers boasted Black Friday and Cyber Monday sales last week, the omicron variant made headlines as the newest coronavirus strain. Many consumers have already made their holiday purchases, but the strain is likely going to shake up spending patterns for the rest of the season.
Holiday sales are on-the-rise this year, but the purchases made will look a little different in omicron makes headway in the US. According to an Accenture survey, roughly 43% of consumers said they were planning to make holiday purchases towards experiences and service gifts instead of electronics, toys, and apparel.
Matthew Shay argues the backdrop to this holiday season looks very different to last year—that consumers feel more comfortable going out so long as they follow protocols. However, nobody is quite sure when omicron will make headway in the US or how hard it will hit.
Shay furthered: “We know, unfortunately, that when the variants have had a real impact on the economy, the goods side of the economy has actually benefited from that because people change behavior away from the experience side of the economy and spend more time and more dollars engaged in the goods side of the economy.”
Vaccine mandates aren’t here yet
Shoppers want to feel safe going into malls, shops, and public spaces, which is why Stephanie Martz, a senior official at the NRF told the New York Times: “We all agree with the premise that vaccines are good and vaccines save lives… But by the same token, you can’t just say, ‘OK, make it so.’”
As of now, very few retailers have implemented vaccine mandates for their workers and customers. But why not? The NRF understands the importance of vaccines and mandating them would undoubtedly show the federation’s commitment to health and safety protocols.
Bloomberg’s Timothy O’Brien argues the decision isn’t as simple as that. Retailers don’t want to “Make it so” because they have a bottom line to protect, and a vaccine mandate could lead to instability and worker shortages.
And because retailers rely so heavily on more substantial labor forces during the holiday season, they’ve requested the Biden administration wait until the new year before adopting vaccine mandates for businesses with over 100 employees.
However, there are retailers who have adopted such mandates and are not experiencing mass worker departures. Tyson Foods and United Airlines Holdings are two success stories, but many, like Walmart, are still treading the line between ‘requiring’ and ‘recommending’ vaccines. The retail giant has adopted a mandate for corporate employees, but front-line workers are only offered incentives.
Further, the mandate suspension “request” from the NRF towards the Biden administration came in the form of a lawsuit that argued mandates would cause “irreparable harm” to the industry and it’s supply chain woes. O’Brien argues the NRF is playing into anti-vaxxer thinking, but hopes that omicron doesn’t push us to our wits’ end.
Retail challenges must be met with decisiveness and action
This holiday shopping season is looking to be better than last for most retailers, but there are significant challenges that need to be met with decisiveness and action. The omicron COVID-19 strain is reason for concern, but retail owners and their customers are more equipped with health and safety protocols, vaccines, and store regulations than they were in 2020.
Retailers are still regaining ground lost during the last 18 months, but the success of e-commerce and alternative shopping channels has enabled growth in areas industry leaders were unable to capitalize on before the pandemic. Black Friday showed us that consumers want to shop in stores, but that they need to feel comfortable to do so.
Going into 2022, consumers will need to hold retailers accountable when it comes to adopting and sticking to protocols and mandates that encourage the health and safety of everyone.
