Destiny USA mall reopens as the coronavirus disease (COVID-19) restrictions are eased in Syracuse, New York, U.S.
Maranie Staab | Reuters
Retailers have faced nothing short of whiplash this year.
Businesses have had to shutter and reopen due to the coronavirus pandemic. They’ve coped with a plunge in sales and supply chain headaches. They’ve chased down protective gear and changed policies to try to reduce the risk of employees and customers getting sick with Covid-19. They’ve boarded up windows during the George Floyd protests, and more recently in the days leading up to the election.
Now, one day after Election Day, they face another threat during the all-important holiday season: Americans who may be distracted or anxious as they await results.
President Donald Trump and Democratic contender Joe Biden remain in close races in key swing states, including Pennsylvania and Michigan, according to NBC. A winner has not yet been declared, leaving consumers and businesses awaiting answers about who will lead the country and shape economic policy.
That could deal a blow to consumer confidence as retailers try to capitalize on the season of gift-giving.
Shopping put on hold
Greg Portell, lead partner in the global consumer practice of Kearney, a strategy and management consulting firm, said the delayed results “will absolutely pause consumer spending.”
“Consumers have been on a great run of spending coming out of the lockdowns,” he said. “We were looking at a great holiday season. All of that is on pause until we see some clarity on who is going to win.”
If history is a guide, at least a temporary drop in spending is likely, according to a recent survey from Adobe Analytics, which tracks the web transactions of 80 of the 100 biggest internet retailers in the U.S.
Adobe found online sales dropped 14% the day after the 2016 election, when Trump was elected to office. They dropped 6% the day after the 2018 midterms, its research showed.
Meantime, 26% percent of consumers said the presidential election’s outcome would affect their holiday spending, Adobe found in surveying 1,000 U.S. consumers last month. And 63% of retailers told Adobe they expect Americans will be more confident in spending, post-election.
“If we don’t get closure and the election results actually end up taking longer than the traditional evening or the morning of the next day, then we might see a little bit of a hangover and a pause right there,” said Jason Woosley, vice president of commerce product and platform at Adobe.
The prolonged counting of votes has also raised the possibility of a court battle or civil unrest — a concern that prompted retailers in major cities like Washington, D.C., and New York City to board up their windows.
Early Wednesday, Trump falsely claimed he had won the election and said he would go to the U.S. Supreme Court to get “all voting to stop.”
Kearney’s Portell said there is especially heightened “passion” in the 2020 election among both Republicans and Democrats, with some people feeling like they are facing a “massive cliff” ahead should their party lose. And that’s something that could lead to potential riots and looting, after the official winner is named, he said.
“If we enter a period of civil unrest, consumer spending will stop, and we will have a horrible holiday season,” Portell said.
Even if Biden or Trump is soon declared the victor, there may be dampened enthusiasm for holiday spending because of election-related fallout, said Mark Cohen, director of retail studies at Columbia Business School. He said he expects holiday sales to be flat or down from previous years.
“Retail requires some modicum of tranquility on the part of consumers who can take the time to enjoy the holiday and divert their attention from things that are making them crazy,” he said. “100% of this country is probably feeling somewhat crazy right now and when this is finally decided in the next few days or weeks, 50% of this country is going to be in a state of anger.”
Plus, he added, retailers will continue to deal with rising Covid-19 cases and how that may disrupt how Americans shop or celebrate. The U.S. recorded another 91,500 new cases of the coronavirus on Tuesday, the second-highest single-day tally to date, according to Johns Hopkins University data. The seven-day average of daily new cases now stands at 86,362 — 20% higher than last week’s levels.
“Covid is the insidious, invisible element that more or less blankets everything that will happen this holiday,” he said.
‘We will work through this’
Americans have shown they’re still eager to shop, even as coronavirus cases rise and many remain out of work. Retail sales have been recovering since May and rose by 1.9% in September, higher than economists surveyed by Dow Jones anticipated. Clothing and accessories increased 11%, followed by sporting goods, music and books that jumped 5.7%.
Matt Shay, president and CEO of the National Retail Federation, said he expects the October numbers to continue that trend. He said he’s confident that retail sales will continue rebounding.
“There is a general consensus that we will work through this,” he said. “The unemployment rate is coming down.”
The unemployment rate was 7.9% as of September, according to the U.S. Bureau of Labor. That equates to about 12.6 million people, according to Refinitiv.
“Historically, political events can be a bit of a distraction, but consumers have the ability to separate what’s happening in the political world from the way they live their day-to-day lives,” Shay said.
Still, pandemic-related trends have sharpened the divide between retail winners and losers.
Some, such as big-box stores like Target and home improvement stores like Lowe’s, have seen huge sales increases as they benefit from Americans cooking at home, spending money they’d otherwise put towards vacations and buying puzzles or bikes to pass the time. Yet a growing list of others — from J.C. Penney to J.Crew — have filed for bankruptcy protection and announced layoffs and store closures.
Even retailers with strong pandemic sales, such as Walmart, have declined to provide outlooks for the year and cited an uncertain future because of factors, such as government stimulus.
NRF has not yet released a holiday forecast, but its survey of 7,660 consumers in early October found they plan to spend an average of $997.79 on gifts and holiday items such as food and decorations. That’s a nearly $50 drop from last year.
According to Cohen, rising retail sales through the back-half of this year mask a more complicated picture: Those sales are concentrated among big-box stores and grocers, as shopping mall-based stores struggle. Millions of Americans are still out of work, and regardless of whether Trump or Biden wins, he said, the president will likely lead a divided government that makes it difficult to strike a stimulus deal for consumers or businesses.
“We are a broken society at the moment and we’re going to remain so for the foreseeable future,” Cohen said. “And retail, which is the heart and soul of our vaunted economy, is going to be a victim of that.”