Black Friday spending could see surge due to pandemic, experts say

Theaters, arenas and hotels’ losses are retailers’ gains this holiday season.

Americans who have been unable to travel or engage in moviegoing, nightclubbing or other entertainment activities much this year — or at all — because of the COVID-19 pandemic will spend more money buying gifts this holiday season than they would have otherwise, retail experts said. But fewer will shop in stores during the four-day retail bonanza that starts with Black Friday and ends with Cyber Monday, they said.

“I think there is a lot of nervousness among consumers in general, but at this point, it’s not going to stop them from shopping in a major way. If anything, it will shift to more sales online as opposed to in store,” said James Bohnaker, associate director and economist in the Boston office of IHS Markit, a market information service headquartered in London.

Consumers will also spread out their in-store shopping over more days in the holiday season.

This year’s holiday spending in November and December will be strong, with IHS Markit projecting sales to hit $784 billion, a 7.6% increase over last year’s spending and the biggest increase since 1999, Bohnaker said.

The National Retail Federation’s forecast was more conservative, with the Washington, D.C.-based trade group projecting an increase between 3.6% and 5.2%, to between $755.3 billion and $766.7 billion, compared to last year’s spending.

Demand ‘we’ve never seen’

Black Friday is traditionally the busiest day of the year for AHC Appliances in Cedarhurst, but the biggest problem for the store might be having enough access to merchandise, said owner Sandy Tau, who founded the business in 1998.

“There is a huge demand for appliances right now that we’ve never seen before,” she said.

The home improvement and appliance retail industries have been booming since spring because consumers, many of whom are working from home and unable to spend money on some recreational activities during the pandemic, are sprucing up their homes. Also, some manufacturers temporarily shut down appliance production because of the health crisis, which has affected product availability, Tau said.

Nationally, e-commerce is expected to account for a record 25% of all holiday shopping, compared to 21% last year, Bohnaker said.

Online sales have been a saving grace for Lynbrook-based clothing retailer Mixology — its e-commerce business is up over 300% — and they will be crucial this holiday shopping season as consumers reluctant to venture inside stores will shop online instead, said Jordan Edwards, chief executive officer for the retailer, which has 11 stores in the New York City metro area.

“Cyber Monday will be our biggest day, by three or four times as big as last year,” he said.

Jericho resident Lori Perlowitz, 56, plans to avoid crowds while shopping this holiday season, she said while waiting for her daughter to try on clothes in Mixology’s Woodbury store Tuesday.

“So, I probably won’t go to a mall … But I’ll go to small stores like this boutique,” said Perlowitz, who said her family had canceled its annual holiday vacation in Florida because of the pandemic.

Changing times

In past years, the official kickoff of the holiday shopping season — typically the five-day period that includes Thanksgiving, Black Friday, Small Business Saturday and Cyber Monday — had come to be seen as an indicator of how strongly retail would perform over the entire season.

But this year’s changes include major retail chains closing their stores for Thanksgiving because of the pandemic.

Already Black Friday’s significance in the overall holiday retail landscape had been waning for years as retailers spread out their promotions over more days, pulling them into October.

Then this year, Amazon moved its annual Amazon Prime Day from July to two days in October because of logistics issues, leading Walmart, Target, Best Buy and Macy’s to host their own major sales events during the same period.

“So that was the official launch of the holiday season,” said Alexa Driansky, a senior vice president in the retail practice at AlixPartners, a Manhattan-based consulting firm.

“We also see a pull from consumers who are shopping earlier because they don’t want to stand in line for a doorbuster in the middle of a pandemic,” she said.

Some analysts believe that the unprecedented impact of COVID-19 makes projecting retail’s performance this holiday season impossible.

“A lot of this hinges on who stays open and for how long if there is a reversion to the thinking in the spring with respect to lockdowns and nonessential vs. essential [businesses],” said Charlie O’Shea, lead retail analyst at Moody’s Corp., a Manhattan-based financial services company.

Top-performing retailers are expected to continue to do well, he said.

“I would be surprised if your top performers do not include Walmart, Target, Best Buy, Amazon … I’d throw BJ’s in that mix,” O’Shea said.

Brick-and-mortar stores, which were taking a beating before the pandemic, were hit hard by the loss of business after months of government-mandated closings, starting in March, in response to the pandemic.

But those stores are going to play a major role in the holiday season closer to Christmas, as shippers struggle to meet delivery demands under the crush of online shopping, O’Shea said.

“Most retail sales in the U.S. are still done in a store. The only way to get product same day reliably is to go pick it up,” he said.

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.