The holiday season is approaching but retailers continue to fret as there are no signs of the coronavirus subsiding. Retail sales are somewhat increasing over the past few months, but are still way behind the year-ago level. However, the pandemic has seen an increasing number of people relying on online shopping, which has been a savior for the retail sector also.
If the present situation continues, people will buy online only even through the holiday season. According to new projections from software provider Salesforce.com, Inc. (CRM), online holiday sales are will triple last time’s figure. Of course, e-commerce has emerged as the most convenient way to shop with many people continuing to stay at home. It has also led to the bounce in the retail sector despite low morale and millions of job losses. Consumer spending too is on the rise.
E-commerce to Drive Holiday Sales
According to the latest projections by Salesforce.com, online holiday sales in the United States are projected to surge 34% year over year for the 2020 season, nearly tripling 12% growth registered in the prior period. The pandemic-induced growth in e-commerce this year will carry into the holidays, and although total sales through all channels are expected to remain flat, digital will make up 30% of seasonal spending, the company predicts.
For the November-December period, digital revenues are anticipated to hit a record $221 billion while total holiday sales will reach $730 billion. Salesforce’s forecast is in line with numbers released last month from Deloitte. The research firm expects holiday sales to jump between 25% and 35% for the November-January period.
The unparalleled jump in online orders during COVID-19 has already put an immense strain on shipping carriers. Although retailers have reported Black Friday-level order volume in the second and third quarters, they’re still bracing for an even bigger surge in Q4. The overall number of holiday packages that will be sent out globally will exceed the shipping capacity for traditional carriers by 5%, jeopardizing the promised delivery windows and potentially delaying up to 700 million orders worldwide, Salesforce projected.
Retailers Go on Hiring Spree
Retailers have already started hiring ahead of the holiday season to manage the rush and ensure smooth on-time delivery. Walmart, Inc. WMT said last month that it will be hiring 20,000 seasonal staff members to prepare for an expected surge in online shopping ahead of the holidays in the United States. This will be Walmart's first large seasonal hiring in five years.
Also, Best Buy, Inc. BBY is looking to hire thousands of new employees. The company is holding job fairs to start the process of hiring for the holiday season at individual stores. There are other factors too that are likely to aid holiday sales this year.
Consumer confidence hit a six-month high in September, reflecting more confidence in the U.S. economy after a summer lull. The final consumer sentiment survey in September climbed to 80.4 from a preliminary reading of 78.9, the University of Michigan said last week. It was also up from August’s 74.1 score. Also, a report on Oct 1 from the Commerce Department showed consumer spending rose 1% in August, reflecting that the economy is on track for record growth in the third quarter after a historic slump in the April-June period.
However, much of this year’s holiday shopping will be done online until there is a definite treatment or vaccine for coronavirus. Given this scenario, it will be wise to invest in retail stocks with a strong online presence.
JD.com, Inc. JD, through its website www.jd.com and mobile applications, offers a selection of authentic products. It offers a wide array of products starting from computers, mobile handsets and other digital products, to home appliances, automobile accessories, clothing and shoes, luxury goods, personal care and other items.
The company’s expected earnings growth rate for the current year is 45.2%. The Zacks Consensus Estimate for current-year earnings has improved 20.8% over the past 60 days. JD.com sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy Co., Inc. is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services.
The company’s expected earnings growth rate for the current year is 17.3%. The Zacks Consensus Estimate for current-year earnings has improved 26% over the past 60 days. Best Buy presently carries a Zacks Rank #2.
Walmart Inc. has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. In this regard, acquisitions of Bonobos, Moosejaw and Parcel, partnership with JD.com and Lord and Taylor, and investment in the online e-commerce platform Flipkart are noteworthy.
The company’s expected earnings growth rate for the current year is 8.5%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days. Walmart has a Zacks Rank #2 (Buy).
Target Corporation TGT has evolved from just being a pure brick and mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing its supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.
The company’s expected earnings growth rate for the current year is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved 44.2% over the past 60 days. Target sports a Zacks Rank #1.
The Kroger Co. KR operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce, and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.
The company’s expected earnings growth rate for the current year is 46.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 60 days. Kroger has a Zacks Rank #2.
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