While at times 2020 has seemed like the year that would never end, the last couple to few months seem to have sped by somehow.
If you think I’m exaggerating, then realize that, as of the publish date for this post, there will be only 88 days til Christmas, 74 days til Hannukah and only 59 til Black Friday. Ack!
Given the holidays’ proximity, I can’t help but wonder what the holiday sales and spending season will look like. After all, things aren’t exactly great economically. Or, I suppose, in any way whatsoever.
People are hurting
The economy has been in a recession officially since late spring, (though until recently you wouldn’t have known it from the stock market). While some economic recovery has taken place, that may be undone if the 20 states reporting upticks can’t nip those in the bud. Because if cases keep going up, the states might have to revert to shutdowns, stunting recovery and probably even causing a backslide.
And let’s not forget that, according to MSN, 30 million Americans are still drawing unemployment benefits and job listings are down 18% from this time last year.
Meanwhile, there was no compromise in sight for another stimulus package/relief bill even before the Senate started focusing on the Supreme Court nominee. So yeah, there probably won’t be a new unemployment bonus or $1,200 check any time soon, which means that a lot of Americans’ finances are going to stay pretty bad or perhaps even get worse in the near future.
Low holiday spending
So it’s pretty much certain that holiday spending won’t compare to the last few years. But how bad will it be?
The current prediction is a 1% to 1.5% increase compared to the rest of the years’ consumer spending. Compare that to last year’s 4.1%, and things are looking pretty grim.
The experts are expecting one of two scenarios to play out. In one scenario people who are doing okay financially spend as normal (1.5% growth), and in the other, they rein in spending as well, out of caution for future uncertainty (1% growth). In both cases, people who are struggling financially are assumed not to spend much, if anything.
There don’t seem to be any 2020 holiday spending survey results just yet, though I’m sure plenty are in the works. So for now there’s really no telling which scenario is more likely. But it’s worth noting that even the best-case scenario still has spending at only 36% of what it was last year.
The impact on holiday deals
So I can’t help but think of the first fall of the Great Recession, when stores flooded everyone’s newspapers and email inboxes in early November with pre-Black Friday sales. Many of the deals were very, very close to regular Black Friday prices.
The phenomenon of pre-BF sales has of course stuck around ever since. But other than that first year, I feel like the prices haven’t been quite as comparable to actual Black Friday deals.
This year I think we’ll see a return to near-BF prices — once again starting very, very early — as stores are desperate to get customers shopping.
How good will the deals be?
But of course, we have to wonder what those deals will look like.
Will pre-Black Friday/actual Black Friday deals be insanely cheap as retailers desperately try to hype people into buying? Will they cater to the people struggling, trying to convince them that even they can afford a little something for the kids?
Or since stores’ profits are already hurting, will they have to avoid deep price cuts? Given how far down revenue is already, can retailers afford to offer ridiculous deals? After all, they have to know it’s unlikely that the people struggling financially will buy more than the loss leaders.
Based on the Great Recession models, I’m guessing stores will go with very low prices, hoping that once people — even people barely getting by — start shopping, the consumerism mindset and general rationalization will take over.
But if that’s their play, I question it greatly.
I think that people barely paying their bills aren’t likely to convince themselves to spend much. Keeping a roof over your kids’ heads is a lot more compelling than the latest toy. Thus I think that at most they’ll go in, get one or two advertised deals and leave with just those items.
So honestly, I’m wondering if retailers’ low Black Friday prices might not actually have a negative result on their profits.
Will they buy at all?
And of course, that’s assuming people who are struggling are going to buy anything at all. Certainly, each year a lot of people buy presents they can’t afford. But that’s in normal times.
These days, everything seems scary and bleak even for people who are normally middle class. Meanwhile, people who have always had to make do on low wages may be struggling even more this year from having hours cut — or their jobs nixed altogether. And without any stimulus on the horizon, I have a hard time believing those folks will be able to rationalize spending.
Then again, I know that parents feel immense pressure not to deprive their children even in the best of times. And this year has obviously been full of misery, anxiety and isolation. So even people barely/not getting by may tell themselves that their kids need something to celebrate.
So perhaps they’ll splurge a bit. But like I said, even in those cases, I’m guessing their buying will be incredibly small and targeted.
Everyone should be careful
So retailers’ fate really lies in the wallets of people are still financially stable. Stores have to pray that those folks spend just like they would in any year.
But even people who are doing okay financially ought to realize that the future (especially of our economy) is extremely uncertain right now. So there’s a decent chance they’re going to be cautious and spend less this season.
Still, I’m guessing that stores’ deals will lure even cautious people into spending more or less as usual. Though of course, with the kinds of extreme deals retailers may have to offer, people will likely get more items for the same amount of money. So stores’ profits will still be lower.
Still, I’m personally hoping that even people doing well are judicious with their spending this year.
Yes, I know it’s bad for the economy/stock market, but very few jobs are completely secure in a recession, let alone a pandemic. So people really do need to be saving more than usual because I think we still have a long way before we hit rock bottom.
A consumerist compromise
So if people insist on throwing around money this year — especially with the rationalization of helping the economy — I’m really hoping they’ll send the funds to gift-giving charities. Take $50 (or even just $25) from your presents budget and give it to a charity that buys presents for low income families.
That way, money is still going to retailers — thus, into the economy — but you’re helping make someone else’s holiday bright too.
Yes, I know that people need food and maybe rent assistance more than a toy for their kid.* But I guess I’m sappy, and I get incredibly sad thinking about a kid without a single present. Not to mention how hard it must be for the parents not to be able to give their kid anything.
You can check out some gift-giving charities here and here. Annoyingly, all the ones I could find seem to be for Christmas gifts only, yet I’m sure plenty of Jewish families will be struggling this year too. So I guess if you want to help Jewish kids have a happy Hannukah, maybe reach out to your area’s local Jewish organizations or synagogues to see if they have programs.
If you want to help feed people, check with your local food banks or go to Feeding America, which stocks food banks nationwide. If you want to give rental assistance, Google your city’s name plus “rental assistance” for some local organizations that help people — or donate to United Way Worldwide or (not my favorite, but also an option) The Salvation Army, which provide financial assistance on a number of fronts, including rent.
All in all
It’s going to be very interesting to see how this holiday sales season plays out.
My hope is that people are judicious with their spending. And that if they do feel comfortable dropping hundreds of dollars for the holiday, at least a few of those bucks can be diverted to families or kids in need.
How do you think holiday sales — and holiday spending — will go this year?