As Prime Day kicks off shopping season, mass merchants continue to thrive

17 November 2020 Consulting.us

Traditional and online-only mass merchants are likely to be the big winners this holiday season, according to Deloitte InsightIQ’s consumer data report for October.

Deloitte analyzed consumer spending data for the first three weeks of October to help predict the contours of the holiday shopping season.

Prime Day/Week (October 11-17) appeared to kick off the holiday season, with a 6% increase year-over-year (YoY) in retail sales. Traditional and online mass-merchants (Wal-Mart, Amazon, Costco, Target) continued their good performance with a wider retail sector heavily damaged by the pandemic, seeing consumer spending rise 10-30% YoY in the first three weeks of October.

The shift to online shopping also continued, with online sales up 24.5% in the first two weeks of October. Online sales in the third week of October saw a 50% YoY increase due to Prime Day – which is traditionally held in July – which explains the extra boost over the figures for that week in October 2019, which had no such retail holiday.

YOY change in consumer spending by sector

Meanwhile, in-store spending in the first three weeks of October saw a decrease of 9%, as many consumers continue to avoid bricks-and-mortar locations amid the pandemic.

Deloitte’s annual holiday survey projects that holiday spending will drop by 7% from 2019, as consumers spend 34% less on travel and socializing. However, retail will pick up a larger piece of the smaller holiday budget, jumping to 66% of total holiday spend ($922 of $1387).

Deloitte’s October pulse report bears out those larger trends, with retail as the only growth category in the third week of October, thanks to Prime Day and other retailers piggy-backing on the event with their own promotions. Travel spending was depressed by more than 50%, while food and beverage sales decreased by more than 10% YoY in the first half of October.

YoY change in consumer spending by retail subsector

Mass merchants – which includes Amazon – saw a bump above 30% growth YoY during Prime Week. Mass merchants have done better than most other categories during the pandemic because they have been able to remain open (often classified as essential due to their sale of groceries and other goods), meet broad consumer needs, and deliver omni-channel experiences. This positions them for continued success in the holiday season.

“Consumers are cutting back on the numbers of stores they visit, both virtually or in-person, making mass merchants the most appealing holiday shop,” said Rod Sides, head of the retail sector at Deloitte US.

Home improvement and home goods stores have also seen growth during the pandemic, as house-bound consumers take on renovation projects and spruce up their nests.

Prime Week also boosted sales for electronics and toys and games retailers, signalling an early start for the traditional holiday gift categories. Deloitte’s annual holiday survey predicts that spending on gifts and gift cards will decrease by 5% in 2020, however.

“The InSightIQ analysis confirms that retailers’ strategy to accelerate holiday shopping was successful,” said Jeff Simpson, leader, InSightIQ, and principal, Deloitte Consulting. “During Prime Week, major retailers’ online promotions drove the share of digital shopping even higher and helped jump-start the shopping season this year as shoppers purchased items traditionally associated with the holiday season, including toys, games, electronics, and sporting goods.”


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