This appears to be particularly the case in the North American and European markets, which are are caught up in an unprecedently high surge of coronavirus infections, almost certainly a result of COVID fatigue on the part of many, but also because of the colder weather that has forced most activity in doors and possibly a number of new mutations in virus that have rendered it more infectious. Full and partial lockdowns that have been enforced in a wide number of regions have led to a falloff in foot traffic.
According to JPMorgan, total spending on 30 million Chase credit and debit cards in the United States fell by 5.4 percent year over year from four weeks before Black Friday through December 14. and “card-present spending,” meaning that credit card that were used physically in stores, plummeted by 18 percent from a year ago.
Speaking to CNBC, JPMorgan senior economist Jesse Edgerton said the lower than hoped for sales were an effect of people avoiding brick and mortar stores as a health precaution.
“To be clear, holiday shopping is still occurring, and we have seen a major increase in unadjusted spending levels since October. But this increase has fallen short of the typical seasonal pattern,” he stated.
Counterbalancing that, JPMorgan reported a 13.5 percent increase in card-not-present spending, indicating that many consumers shifted to online shopping.
The U.S. Commerce Department reported retail sales in November in the United States were 1.1 percent lower than economist’s earlier projections.
LOCKDOWNS LEAD TO A STALL IN UK SALES
A similar picture emerged in the United Kingdom, which also had been hard hit by a surge in COVID infections. According the Office for National Statistics (ONS), retail sales fell by 3.8 percent in November, ending a six-month streak of rising trade.
“After a run of strong growth, retail sales fell back in November as restrictions meant many stores had to close their doors again,” said deputy national statistician for economic statistics Jonathan Athow. “Clothing and fuel were particularly hit by the winter lockdown, with their sales falling sharply.”
“In a month where England went back into lockdown and the UK as a whole was subject to tightening restrictions, it’s little surprise that physical retail sales growth stalled in November,” said Lynda Petherick, head of retail at Accenture UKI, quoted by the BBC.
As was the case in the United States, the ONS data showed that COVID has changed shopping habits, with online retailing now accounting for 31.4 percent of total retail spending in the United Kingdom, compared with 28.6 percent a year earlier.
HOLIDAY SHOPPING MAY EXTEND INTO JANUARY
But with physical shopping made objectively more difficult by the COVID crisis, it is likely that the holiday season will be extended long into January, allowing consumers more time to do what they were reluctant to with the pandemic raging outside.
JPMorgan reported a 13.5 percent increase in card-not-present spending in the United States, indicating that many consumers shifted to online shopping. Online retailing in the United Kingdom is accounting for 31.4 percent of total retail spending, compared with 28.6 percent in 2019.
If the newly available COVID vaccines start suppressing the spread of infection, then an uptick in in-store retail activity can be expected.
According to a new survey from Ware2Go, some 31 percent of Americans said that they intend to shop within a few days after the holidays, and 34 percent plan to shop within the month of January.
This survey was conducted in December 2020 and polled more than 1,000 people ranging from ages 18 to 75.
But as evidence shows, the recovery in January will depend largely on where things stand with the pandemic. If the stricter social distancing measures are effective and the now available COVID vaccines start suppressing the spread of infection, then an uptick in in-store retail activity can be expected. If that does not happen, then the recovery is likely to be delayed until later in the first quarter, and possibly beyond.