Generally speaking, Amazon (NASDAQ: AMZN) is not a company businesses want to be in competition with. And at a time when so many retailers are struggling, Amazon continues to thrive, especially as concerns about shopping in stores and malls drive more consumers to online orders during the holiday season.
In fact, as per Deloitte's 2020 pre-Thanksgiving pulse survey, consumers said they planned to spend just 38% of their holiday budget in stores, with the remaining 62% being spent online. And in the course of the Thanksgiving shopping weekend, online-only purchases increased by 44%, reports the National Retail Federation.
In light of all this, you'd think Amazon would clearly have the upper hand this holiday season in particular, especially given its extensive network of fulfillment centers and shipping relationships. But physical retailers aren't necessarily out of luck, either -- especially when we consider the one key advantage they hold over Amazon.
Shipping logistics could trip Amazon up
Shipping issues frequently arise during the holiday season, when there's a general boom in sales across the board. But this year, an uptick in online sales could push shipping companies beyond their capabilities. In fact, there are already reports of widespread delays and interruptions as couriers attempt to keep up with increased demand. That could, in turn, lead to a decline in confidence on consumers' part, and that's something physical retailers can work to their benefit.
While Amazon may have turned product distribution into an art form of sorts, the one thing it lacks is actual stores. Consumers who order products from Amazon are reliant on couriers to deliver those purchases in a timely manner, and this year in particular, that may not happen. As such, consumers may opt to do more of their last-minute shopping at physical retailers to ensure that they don't miss out on the holiday window due to shipping issues or holdups.
Many retailers have made adjustments in the course of the coronavirus pandemic to better facilitate the purchase and distribution of goods. A large number now offer BOPIS -- buy online, pick up in store. That alone allows consumers to minimize their time spent at retailers, all the while getting same-day access to the items they purchase from the comfort of home. On top of BOPIS, many retailers are offering curbside pickup so that customers don't even have to leave their vehicles to retrieve their purchases. Given the number of parents without childcare, that's a lifeline. It's also a great option for high-risk individuals who need to hunker down during the pandemic but still want to shower loved ones with holiday gifts.
Of course, many physical retailers derive much of their revenue from online sales -- especially this year. And those sales are, naturally, shipping dependent. But at the end of the day, during the holidays, consumers want reassurance that the items they buy will get into the hands of the people they're intended for on time. And to a large degree, physical retailers may do a much better job than Amazon of making that happen.
If consumers do indeed spend their last-minute shopping dollars at stores, it'll help pump revenue into sluggish retailers and potentially avoid closures. That's good news for malls and shopping centers that might otherwise grapple with a post-holiday vacancy crisis that's bound to shake real estate investors to their core.