Holiday Sectors to Watch

Placer ,  October 30, 2020

The holiday season is upon us, and it may be among the strangest and most different in a long time. So, we tried to make sense of it, by highlighting a few sectors and brands that we believe will stand out in this unique period.

Wholesale Leaders

Two key trends are lining up to give wholesale clubs a boost this holiday season. Firstly, mission-driven shopping is orienting visitors to try and accomplish as much as they can with as few visits as possible. Secondly, value-oriented offerings are being prioritized in a period that has been heavily impacted by economic uncertainty. And this works brilliantly for wholesale clubs.

Wholesale clubs provide a lot of value, the ability to do a lot of shopping at one time, and to focus on a longer period of time with each shop. And while they are there it will be hard to miss out on the huge sections that are oriented to gifts, outdoor furniture, electronics, and even jewelry. Essentially, these brands are uniquely well-positioned to drive visits and could see a major boost in the types of inventory they are able to offload in this particular holiday season. Now add in the desire to stock up ahead of the winter and the addition of key grocery shopping periods like Turkey Wednesday and pre-Christmas, and the 2020 holiday season feels like a recipe for wholesale success.

Home Goods

We may not be going out on too much of a limb with this one, but ignoring the home goods surge would be crazy. Brands like IKEA, Bed Bath & Beyond, and HomeGoods were all seeing steadily improving traffic deep into the fall. And even some brands with negative trends were succeeding. At Home, a chain that has enjoyed huge traffic growth over recent months saw its year-over-year growth dip to just 14.8% up year over year, a huge testament to just how strong this period has been for them considering this was a low point.

And it is likely that the situation could get even better for players in the space. The holiday season often provides a peak for this sector, key competitors are liquidating, and we are likely to be stuck indoors even more because of the winter season. However you analyze the space, it is hard to see any that is better positioned for the coming holiday season.

Malls

If home goods marked a bit of an obvious choice, forecasting a better than expected season for indoor malls may be a bolder selection. While the sector has clearly been faced with a unique set of obstacles the ability to align with mission-driven shopping during a wintry holiday season should help their locations provide respite for visitors looking to accomplish more with each visit while avoiding the elements.

Why the confidence? Because indoor malls have a fairly high floor with an even higher ceiling. If these locations are only capable of maintaining their current pace of return while stealing some of the traffic currently heading to outlet centers, the high conversion rates being seen throughout the retail sector should translate to a positive end to an especially difficult year. Yet, if these locations can prove capable of driving smaller bursts of urgency and demand across a longer season where being indoor becomes an advantage, the results could be very impressive. And this is especially true for those malls that are home to well-positioned brands like Lululemon, Bath & Body Works, and the range of luxury players. Importantly, travel is also likely to be curbed significantly meaning that many of these malls could see an added benefit to their suburban and outside of the big city orientation.

Coffee

If you’re like me, you still love coffee during the summer, but can’t imagine living life without it during the colder months. And this something that has historically given a huge boost to big coffee brands. In fact, Black Friday served as the biggest single-day for visits nationwide for Starbucks in 2019.

And while the loss of that one-day surge will likely happen, the benefits of an extended holiday shopping period could provide a huge gain. This is especially true for brands that have proven effective at creating their own holidays when needed.

Big Box

Yes, the positioning for top-tier retail giants like Walmart and Target may be obvious but, it is also hugely significant. So, include them we shall. Not only do these brands dominate in the age of mission-driven shopping, but they are among the few who have classically seen more strength pre-Christmas than Black Friday weekend. Why does this matter? It shows that they are essentially Black Friday-proof, so the removal of any single component from the holiday mix doesn’t impact their ability to recreate that value elsewhere.

This is even more true when considering their wide mix of products allows them to drive visits in major grocery spikes pre-Thanksgiving and pre-Christmas. Essentially, these brands possess a unique power that is put on even greater display in the current environment. The wide product range means many visit types can begin at these locations while also allowing shoppers to check other things off their list. And in 2020, that makes an even bigger difference.

To learn more about the data behind this article and what Placer has to offer, visit https://www.placer.ai/.