NRF Stays Bullish for Holiday and Addresses COVID-19, Crime

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  • Matthew Shay
    President and CEO of the National Retail Federation

Despite a dip in shopper turnout from Thanksgiving to Cyber Monday, the National Retailer Federation said crowds were bigger than expected and maintained its bullish holiday forecast for 8.5 to 10.5 percent sales gains.

But amid the continued holiday optimism, concerns over rising COVID-19 cases, the new Omicron variant

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and smash-and-grab robberies have crept into the conversation. The pandemic and spikes in crime could negatively impact holiday shopping and labor.

“Retailers continue to put the health and safety of their teams and employees and shoppers at the highest level of priority. That will continue to be the case. Protocols will remain in effect,” said Matthew Shay, NRF’s president and chief executive officer, during a press conference on the holiday season so far.

“We don’t have any data whether this might impact retail. It’s obviously early to know how this variant works out,” Shay told WWD. “At the moment, based on everything we are seeing and hearing, there is no need to panic. We are in a much better place than a year ago. Eighty percent of Americans have at least one shot. Seventy percent are fully vaccinated. We remain confident there’s a very positive trajectory in the economy and overall retail through the season.”

Matthew Shay - Credit: Jenna Bascom Photography
Matthew Shay - Credit: Jenna Bascom Photography

Jenna Bascom Photography

Shay said Pfizer chairman and CEO Albert Bourla publicly expressed “a level of confidence” that Omicron variant may be responsive to the vaccines. On Monday, Bourla said he expects the vaccines to have some level of protection, either very high or a reduced level — and that will take a couple of weeks to find out.

“We know that when variants have a real impact on economy, the goods side of the economy has actually benefited,” Shay observed. “People move away from [spending on] experiences,” leaving more dollars to spend on merchandise. “We continue to believe retail industry is prepared to deal with whatever might happen. It was important to hear President [Joe] Biden’s remarks on Monday that the U.S. is not going to go back to lockdowns and closures and restrictive behavior. We can’t continue to throw money at the challenges,” Shay added, referring to government subsidies to businesses and individuals impacted by COVID-19.

Over the past week, there have been “smash-and-grab” robberies in Los Angeles, San Francisco, Chicago and a handful of other cities. “We all find this incredibly challenging,” Shay told WWD in response to a question. He said a group of NRF members already convened on the issue, and that there are hundreds of people participating in calls. Shay said greater resources and coordination between federal, state and local authorities is required to confront and prevent future smash and grab incidents, as well as getting the Department of Justice and federal law enforcement more involved. Shay said the NRF has proposed “a whole range of solutions. We continue to make this a real priority. You will see us take a much more aggressive position on this going forward.”

While there are concerns that COVID-19 cases could impact the consumer psyche and the willingness to get out and shop stores, consumer sentiment is currently “positive,” according to Shay.

He said the NRF, which defines the holiday season as Nov. 1 through Dec. 31, is sticking to its forecast that sales will grow between 8.5 percent and 10.5 percent over 2020 to between $843.4 billion and $859 billion.

Some retail experts differ.

Customer Growth Partners forecasts a 6.7 percent growth, while veteran retail analyst Walter Loeb expects no more than 7 percent growth in holiday sales.

Hemant Kalbag, managing director at Alvarez & Marsal, told WWD, “Demand is easily up 8 to 10 percent, but I am not confident that will translate into retail sales of 8 to 10 percent. The challenge is twofold. It is still unknown what impact supply chain delays will have on product availably as we get close to the second half of December. It is very likely most retailers will run short of inventory in the second half of December on their most popular items.” Retailers are managing expectations, Kalbag said, and hoping customers exhibit patience with longer deliveries and selecting second choices in terms of sizes and styles.

“There is a tremendous amount of anxiety and fear of what this new variant could mean in terms of the opening of the economy, which has been very much on track,” added Kalbag. If the variant spreads through the U.S., “it sets back the reopening of the economy and society by several months. The impact most likely won’t be felt for a few months, past the holiday season, which is good for retailers. But it’s too early to say what this variant will mean to the global and U.S. economies. The longer term impact on the supply chain is unknown. The industry was counting on some congestions in supply chain easing up in 2022.”

“I’m at 6 to 7 percent, no more,” veteran retail analyst Walter Loeb said, referring to holiday sales gains. Resurging cases of COVID-19 and the discovery of the Omicron variant spreading could push people to buy more through the internet, Loeb said. Generally, he thinks shoppers will be able to buy what they want or something similar.

During the press conference, Shay said the supply chain issue “is not going to impact the holiday season in a way that spoils our ability to enjoy it with our family and friends. Nearly 70 percent of consumers believe the gifts and items they need and want they will find. Retailers are going to meet their needs in terms of their second or third choice, if they don’t have their first choice.”

Nearly 180 million Americans shopped during the five-day holiday shopping period from Thanksgiving Day through Cyber Monday, according to an annual survey released Tuesday by the National Retail Federation and Prosper Insights & Analytics. The survey of 5,759 adult consumers was conducted Nov. 24 to 29 and has a margin of error of plus or minus 1.3 percentage points.

“Retailers have adapted and enticed customers with a number of incentives throughout November. The Thanksgiving holiday weekend remains a significant time for friends and families to check specific holiday items off their lists,” Shay said in a statement. “Over the last few years, consumers have shifted their holiday shopping plans to start earlier in the season.”

In total, 179.8 million unique shoppers made in-store and online purchases during the holiday weekend, exceeding NRF’s initial expectations by more than 21 million. The figure compares with 186.4 million shoppers in 2020 and is in line with the average of the last four years, the NRF said.

Retailers saw an increase in foot traffic, with approximately 104.9 million shoppers visiting stores, up from 92.3 million in 2020. The overall number of online shoppers decreased to a total of 127.8 million from 145.4 million last year.

Black Friday remained the most popular day for in-store shopping, with 66.5 million shoppers, followed by 51 million shoppers on Small Business Saturday, with 71 percent of Saturday’s shopping indicating they were shopping specifically to support small businesses. Similar to recent years, Black Friday surpassed Cyber Monday in terms of total online shoppers, with 88 million shopping online Friday, compared with 77 million on Monday.

“Over the last few years, Black Friday has emerged as a powerhouse day for both in-store and online shopping,” Prosper executive vice president of strategy Phil Rist said. “Even though many consumers are starting their holiday shopping before Thanksgiving, a considerable portion of their purchases are still made over the course of the five-day weekend.”

Thanksgiving weekend shoppers spent an average of $301.27 on holiday-related purchases such as gifts, decor, apparel and toys. This is down slightly from $311.75 in 2020. As in previous years, $215.40 of that amount was spent directly on gifts.

Top gift purchases over the weekend included clothing and accessories, bought by 51 percent of those surveyed; toys, 32 percent; gift cards/certificates, 28 percent; books/music/movies/video games, 27 percent, and electronics, 24 percent.

Eighty-four percent of holiday shoppers indicated they already started shopping and have completed 52 percent of their holiday purchases on average.

According to NRF’s annual survey released in October, consumers plan to spend $997.73 on gifts, holiday items and other non-gift purchases this year.

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