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Published in Economic Development
Tenden, Grand Haven. Tenden, Grand Haven. COURTESY PHOTO

Retail success in 2021 hinges on holiday shopping, adapting to e-commerce

BY Sunday, December 20, 2020 05:10pm

The pandemic pushed local retailers that traditionally rely on foot traffic to beef up their online presence and offer curbside and delivery options — mostly out of necessity to accommodate shopping from home and to compete with online retail giants.

Even as in-person shopping restrictions and capacity constraints are eased in 2021, retailers are expected to make this e-commerce shift permanent. While online shopping is not a new concept, many small retailers were pushed into it faster than they might have been under normal circumstances, said Rick Baker, president and CEO of the Grand Rapids Area Chamber of Commerce.

“The silver lining of 2020 was that it caused people to think and work differently, and there are always learning opportunities from that,” Baker said. “A lot of businesses in our own organization and around town have tried something new that they might not have tried before and said they are going to keep certain things moving forward.”

When the shutdown initially started last spring, Jean Marie’s was just beginning its online business when it had to shut down in-person shopping, said Matt Holmes, co-owner of the clothing and gift store with four locations in West Michigan.

“Up until that point we had very little online business. In eight months or so we’ve developed a pretty robust online platform and launched an app, which allows us to do live video selling and the user can purchase things QVC-style,” Holmes said, adding that about 2,000 people have downloaded the app. “It’s been a great way to at least reach a portion of our customer base that’s been unwilling or unable to shop in person for whatever reason.”

The most successful retailers at Woodland Mall during the pandemic have quickly adapted to e-commerce shopping, said Marketing Director Cecily McCabe.

“There is still a strong desire for people to shop brick and mortar, but embracing e-commerce has increased profitability,” McCabe said.

While mall retailers are still using their stores for in-person sales, they’re also operating quasi-shipping and packaging centers from their locations, McCabe said. The close proximity to consumers compared to a major online retailer that may also involve delayed shipping is beneficial to shoppers, McCabe said.

Shoppers can use curbside services to avoid high shipping fees and delays or use same-day retail delivery services that operate similar to DoorDash and UberEats if they want to get items the same day or quicker, she said.

“These things are just starting up now, but we will continue to see these trends in 2021,” McCabe said.

Predictions difficult

The pandemic has made this year’s holiday forecast the “most challenging ever” to predict, National Retail Federation Chief Economist Jack Kleinhenz wrote recently in a monthly economic review. 

A lack of predictability is ultimately one of the biggest obstacles for retailers, Baker said. He anticipates that could improve some in 2021.

“You can adapt even under the most challenging circumstances, which we saw this year, but it is easier if you can plan a little longer term,” Baker said.

Forecasting for the fourth quarter of 2020 has been the most challenging part of the year, Holmes said.

“Trying to stock up for what we hope the demand will be with implications out of our control like limited capacity and different restrictions makes it more difficult. And the fourth quarter typically drives sales for the year,” Holmes said. “Tying into that is working with our vendors who are going through that same process.”

Retailers are in the middle of the critical holiday shopping season, which will position store owners well for 2021 or lead to business closures. 

“If they don’t have a good Christmas or holiday season, it will be even more challenging,” Baker said. “This holiday season for the retail segment in particular is so important. They earn a huge percentage of their annual revenue in this period of time.”

This year, the National Retail Federation is forecasting that holiday retail sales will increase between 3.6 percent and 5.2 percent over 2019, which would be between $755.3 billion and $766.7 billion. This includes online and other non-store sales, which are expected to increase 20-30 percent, or $202.5 billion to $218.4 billion, driven by this year’s strong shift to online shopping. 

Meanwhile, Amazon is having its best holiday shopping season in the e-commerce giant’s history as foot traffic dropped 52 percent at stores on Black Friday compared to last year, according to data from Sensormatic Solutions

Trends for in-person shopping

McCabe said in-person shoppers are seeking deeper engagement with stores, which includes loyalty programs and booking private shopping sessions.

“We have seen a lot of retailers enact private shopping with a stylist, a trend we expect to continue into the future,” McCabe said. “They are able to pull sizes in advance for the shopper, and it’s especially convenient for people who are short on time or feel they need extra assistance for whatever reason.”

McCabe expects the return of sit-down dining to help increase foot traffic in 2021. A large portion of mall shoppers pre-pandemic were also older and therefore more at-risk of contracting the coronavirus. Mall officials hope to see these shoppers with pent-up demand later in 2021.

Overall McCabe is optimistic shoppers will come back strongly to the mall this spring, but it will be a “long haul” to get there.

“We need to get through December, January and February and then we’ll see more activity in retail consumers,” she said.

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