Deloitte forecasts ecommerce holiday sales will rocket past last year’s 13.6% growth, while total retail holiday sales will increase a modest 1%-1.5%. However, a new small business survey finds that 34% of retailers are expecting their online holiday sales to decrease this year.

Research firm Deloitte expects online holiday sales to increase 25%-35% for the 2020 season and reach $182-$196 billion for ecommerce sales in November, December and January.

This is much higher than the 2019 holiday season, when ecommerce sales increased 13.6% year over year for the season, according to Digital Commerce 360 estimates, which defines the holiday season as November and December. The U.S. is still largely struggling with the coronavirus pandemic, meaning more consumers are apt to avoid indoor, crowded spaces, such as stores, during the holidays.

“Ecommerce is likely to be a big winner because consumers have shown a clear movement towards buying online rather than at brick-and-mortar stores,” says Daniel Bachman, Deloitte’s U.S. economic forecaster.

The pandemic has accelerated the trend of shopping moving online, says Rod Sides, vice chairman, Deloitte LLP, and U.S. retail, wholesale and distribution leader.

“COVID-19 undoubtedly increased consumers’ digital engagement with retailers,” he says. “While retailers were certainly headed in that direction, COVID-19 has accelerated the shift.”

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But the coronavirus pandemic’s impact on retail and consumer spending will be felt this year, Deloitte expects. Total holiday retail sales are likely to increase 1%-1.5%, Deloitte forecasts. This is a much slower growth than the 2019 season, where Digital Commerce 360 estimates total retail sales for November and December 2019 increased 4.1% year over year.

“The lower projected holiday growth this season is not surprising given the state of the economy,” Bachman says. “While high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat.”

Large retailers are the ones that will likely see the most increases in store sales, Sides says. “Particularly, big-box chains are likely to gain the most this season as consumers consolidate shopping trips,” he says. “Plus, for those shoppers who need to purchase last-minute gifts, and the shipping guarantees have expired, brick-and-mortar stores will be the best place to find that one final gift.”

How retailers are preparing for holiday 2020

Retailers are also anticipating this slowdown in holiday sales, according to a recent PayPal Credit survey. The August survey polled 1,000 small and medium U.S online retailers that use PayPal in multiple verticals including apparel, cosmetics, home goods, electronics and sporting goods.

Overall, more than one-third, at 34% of merchants, said they expect holiday sales to be lower than last year. Only 28% said they expect holiday sales to increase, 21% said flat and 17% said they don’t know. Figures are rounded.

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To boost holiday sales, nearly half of merchants (49%) are planning to offer discounts, 43% plan to increase online inventory, 39% plan to sell on marketplaces, 31% plan to make products available on social media apps, and 29% are considering increasing digital advertising.

Because of the pandemic, the 2020 online shopping holiday season will look different for merchants compared with years past, which means preparation looks different too.

 

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Past issues of Internet Retailer Magazine (a Digital Commerce 360 brand) found that retailers usually begin holiday preparations in July, with plans finalized by October. But this year, the coronavirus pandemic has brought only uncertainty to retailer holiday prep, according to the PayPal survey.

In PayPal’s August survey, a majority (57%) of merchants have not started planning for the upcoming holiday shopping season. 28% of these merchants say they have not started planning because they are taking a wait-and-see approach and it’s too early.

A large share of merchants, however, are sure of one thing: They won’t be hiring. 70% of merchants said they are not hiring extra help or rehiring previously laid-off employees because of COVID-19.

One thing retailers are doing is making adjustments to in-store shopping, including adding curbside pickup. 46% of the surveyed merchants with stores said they are planning to offer curbside pickup for the holiday season. This dovetails with an analysis Digital Commerce 360 recently conducted. As of August 2020, 43.7% of the 245 retailers with stores ranked in the Top 500 offer curbside pickup, a sharp increase from 6.9% at the end of 2019.

More in-store holiday shopping changes include:

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  • 45% said they will make masks mandatory.
  • 34% of merchants will provide hand sanitizer in store.
  • 34% are implementing contactless payment options.
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