Christmas vs COVID-19: will End of the Year spending survive?
By Emmanuel Allottey
The end of 2020 is fast approaching and for consumer spending this is the busiest season in the retail calendar year. COVID-19 has subdued the retail industry with significant impacts to consumer behaviour, product demand, and retail store, factory, and logistics services availability.
The impact of COVID-19 on the economy has threatened the disposable income of many individuals. According to World Bank forecasts, the global economy will shrink by 5.2% this year with possibilities of business collapse and job layoffs among others. The emphasis on essential goods and services have placed discretionary spending on luxury goods on the backfoot. The Retail sector faces uncertainty whether they will experience a bumper End of the Year spending season or continued depressed sales as a result of COVID-19.
The End of the Year is a peak selling season for retailers in many nations around the world. Sales increase dramatically as people purchase gifts, decorations, and supplies to celebrate the end of the year. Strategic marketing campaigns and events such as Black Friday, Boxing Day specials, are known to drive exponential growth in consumer spending each year.
Financial Institutions are conscious of this phenomenon and compete amongst themselves to capture as much business as possible. Towards the end of the year, Financials Institutions usually advertise consumer spending related campaigns, promotions, give-aways to encourage the usage of their products and platforms.
The internet is increasingly become an integral part of the shopping process as the virus continues to rampage the world. Social distancing rules and lockdowns have amplified the advantages of internet shopping. Retailers that are agile and provide the convenience for consumers to shop online with logistics in place to deliver the goods stand to benefit from the improved momentum in sales.
Travelling, which is usually a major activity undertaken towards the end of the year is currently impacted by national lockdowns linked to COVID-19. Borders remain closed to international travel and the tourism industry is reeling from the effects. Travelling and its ancillary activities contribute to increased retail spending.
The prevalence of COVID-19 stands to influence the End of the Year spending season. Retailers through innovation and agile strategies can mitigate the impact of COVID-19 and unlock opportunities to drive revenue success in the last quarter of the year, after a challenging start to 2020.