Visits: 66
It’s only September, but Santa Claus is already nervous about coming to town.
And he is not worried about whether kids are naughty or nice, as much as he is about the chance that taking photos with them on his lap at a local mall could expose him to the coronavirus.
“Santas are concerned about catching it, especially considering they’re immunocompromised,” said Stephen Arnold, a Memphis resident and president of the International Brotherhood of Real Bearded Santas, a trade group with nearly 2,300 members. “Almost all of us have diabetes and heart conditions and are overweight and elderly.”
Mr. Arnold’s Santas are not the only ones thinking about how different the holidays will be at malls and department stores this year. Thanksgiving, the traditional start of the holiday shopping calendar, is still more than two months away, but retailers pummeled by the coronavirus pandemic have already been making decisions about inventory, staffing and how best to connect with customers skittish about visiting crowded stores during a pandemic. The result will be a 2020 season that is transformed in fundamental ways — and also unlikely to make up for the severe drops in revenue caused by the shutdowns.
In August, the Commerce Department reported that retail sales in the United States rose 1.2 percent in July, the third straight month of growth. But the increase slowed noticeably from June, and the way Americans are shopping has changed significantly. Customers have moved online in greater numbers, hoping to avoid crowds at stores, and retailers are already adjusting their holiday plans accordingly.
Rather than enticing shoppers into stores with holiday sales events, retailers like Walmart and Target recently said they would try to temper the crowds by closing on Thanksgiving Day and putting their best deals online earlier than usual. Instead of conversing with browsing shoppers, many store workers will be spending their time handing off purchases to people who pull up to the curb in their car. And the holiday windows and light shows common to department stores in cities across the country will probably feel muted with a diminished amount of foot traffic.
“I do think it’s going to be a holiday season unlike any holiday season we’ve seen before given social distancing and masks and everything else,” Chip Bergh, chief executive of Levi Strauss & Company, said. There’s “the combination of pandemic, which won’t be gone by this Christmas, and the economic fallout from it, which, who knows how bad it’s going to be by then?”
With the national unemployment rate at 10.2 percent, an estimated 30 million Americans are relying on unemployment benefits and many people’s ability to spend money on gifts for the holidays will largely depend on whether new aid is made available.
“It’s a very important time of year spiritually and people will make sacrifices so that they can go get Christmas presents,” said Kenneth Rogoff, an expert on economic calamities and a professor of economics at Harvard University. “But it’s hard to see a blowout Christmas season when you have a 15 percent unemployment rate.”
As special as the holiday season feels to shoppers, it is crucial for stores. Holiday sales in November and December can bring in 20 percent of a retailer’s annual revenue, and 30 percent of sales for hobby, toy and game stores, while driving tremendous profitability, according to the National Retail Federation. The most recent annual report for Macy’s, which also owns Bloomingdale’s, showed that the fourth quarter accounted for 34 percent of its sales.
A pause is expected on so-called doorbuster deals and the ensuing madness created by crowds rushing into stores for limited discounts and fighting over electronics. Companies including Hasbro, Target and Macy’s have signaled plans to offer discounts over a longer period, starting as soon as late October. Jeff Gennette, Macy’s chief executive, said in a July earnings call that he expected Black Friday deals “to start in full force after Halloween.”
In preparation for customers who are nervous about crowds, Macy’s has been exploring new ways to manage store traffic and rethinking bustling sales events like Black Friday and the 10 days before Christmas, Mr. Gennette said. He added that this year’s new curbside pickup “is going to be a big secret weapon for us this holiday season,” and especially huge with shoppers who aren’t comfortable entering stores. Its performance will be crucial: Macy’s said today that sales for the first half of this year were $6.6 billion, compared with $11 billion last year.
“We’re not going to see any of these crazy blowout sales; we’re not going to see a typical Black Friday — we’ve already seen the cancellation of Thanksgiving Day shopping,” said Stacey Widlitz, president of SW Retail Advisors, an independent research firm. “The stores cannot safely handle these.”
Nordstrom has been preparing for more pressure on its e-commerce business this holiday season and “doing a lot of scenario planning about what it’s going to take to make sure that we can fulfill the demand if it’s going to happen disproportionately in online channels,” Peter Nordstrom, president and chief brand officer of the company, said in July.
“The wild card is going to be the traffic we get through physical stores, given the sensibility of customers around Covid,” he said. “And no one’s got a crystal ball on that.”
Far more shopping is expected to take place online or through pickups at stores. That is safer for consumers, but means that retailers will lose out on the extra purchases people make once they’re in stores, as well as change the nature of seasonal retail work.
And it puts a serious emphasis on smooth delivery. Robert Carter, the chief information officer of FedEx, said in July that the company referred to the surge in e-commerce traffic and volume as “getting sling-shotted into 2023.”
“What we’re really preparing for is probably the greatest e-commerce penetration within a holiday season that we’ve ever seen, and probably the largest year-over-year growth in online shopping,” said Michelle Cordeiro Grant, chief executive of Lively, an intimates and loungewear brand that mostly sells online.
That shift, and the public anxiety around visiting stores, will probably put additional pressure on department stores — traditionally some of the most festive destinations during the holiday season — which have already seen sales drop significantly this year, leading to several bankruptcies and prompting a wave of store closings and liquidations.
Even while many retailers that sell apparel and other discretionary goods have taken a blow this year, they have had time to slash their inventories to avoid steep markdowns, said Simeon Siegel, a retail analyst at BMO Capital Markets.
“People hear pandemic and think mass discounts,” he said. “The reality is unlike 2008, retailers and brands clamped down, stopped ordering and, therefore, the surprising truth is that inventory seems fairly under control. So come holiday, depending on what the demand looks like, I don’t know that everyone should be expecting fire-sale prices.”
Levi’s was quick to adjust to that reality this year. “If you wind up with too much inventory, you have to get rid of it,” Mr. Bergh said. “The only way to get rid of it is mark it down, and that’s just not good for the health of the brand.”
On the other hand, more expensive items, like jewelry or higher-end electronics, could see a boost in sales. People who haven’t lost their jobs may use the holidays as an opportunity to buy an extra-special gift for themselves or their family members.
“Because some people are not spending on eating out and going to the theater and traveling, they actually have extra money to buy an aspirational product, which helps luxury and higher-end products,” said Marie Driscoll, managing director of luxury and fashion at the research firm Coresight Research.
Still, the holiday season is likely to be unforgiving to retailers that lack a sophisticated e-commerce infrastructure.
“Those retailers that thought they had time to build new online facilities, build new online experiences, just lost that time,” said Michael Brown, a retail management consultant at the firm Kearney. “It is going to accelerate the number of bankruptcies coming out of this holiday because they won’t be able to deliver and will miss the business opportunity.”
Christmas has already forced one retailer, The Paper Store, into bankruptcy. The specialty gifts company, based in Acton, Mass., lost so much revenue from store closings that it did not have enough cash to buy inventory for the holiday season. It decided to file for Chapter 11 protection in July, hoping that the cash infusion from a sale would allow it to buy the Christmas stock it needed.
As for Santa, Mr. Arnold, 69, anticipated that at least 20 percent of his group’s members intended to sit out this season — a not insignificant financial decision given that Santa performers, mostly retirees, can earn anywhere from $4,000 to $30,000 for their work.
About 30 percent were exploring video conferencing options like JingleRing, which arranges virtual visits with Santa and Mrs. Claus. (There are more than 200 Mrs. Claus performers in the organization.) Santas who do venture into stores plan to wear masks — Mr. Arnold has been sporting one with a holiday theme — and may get creative about interacting with the public. He added that more than half of the group typically worked in malls and big box stores.
A firm in Texas created a structure that puts Santa behind a thick acrylic wall and seats children in front of it, then uses specific angles and lighting for photos that make it look as if they are closer together. Another idea being developed, Mr. Arnold said, is telling a story about elves who accidentally trap Santa in a snow globe, allowing Santa to visit with children while being protected by the orb.
“We’re all trying to figure out ways to have that spirit out there and to be working,” Mr. Arnold said. “It’s going to be something very different than we’re accustomed to and we’re all going to be worried about our own personal health.”
Contact Sapna Maheshwari at [email protected] or Gillian Friedman at [email protected].
