Alexander Zesch authored a guest article for the November 13, 2020 issue of Tampa Bay Business Journal discussing what the holiday season may bring struggling retailers during this most unusual year. While the shopping season is unlikely to save companies that were already struggling before the pandemic, the cashflow generated in the coming month could buy them time and even help other retailers turn the corner and avoid bankruptcy.
Optimistic analysts predict an overall spending increase between 1 and 2 percent over 2019, which is significantly lower than the sales uptick retailers enjoyed last year. The holiday shopping season is unlikely to significantly impact the bankruptcy landscape through 2020 since retail bankruptcies tend to taper off after Labor Day, but it could be a boon for those who are holding on until February in hopes that the pandemic will end and a resurgence of in-store shopping occurs.
However, the boost in sales will likely only delay the inevitable for retailers in decline – unless we see an early 2021 end to the pandemic that boosts consumer enthusiasm. The average savings rate of American households has increased during the pandemic, which opens the door to this possibility and gives retailers a reason for hope.
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