Holiday Season 2020 Hot Items Point To Building Materials, Spirits, Groceries, Per IBM Data

COVID-19 has accelerated the shift from in-store to ecommerce purchases by roughly five years, with online shopping projected to grow by nearly 20% in 2020, according to data released Monday.

The IBM U.S. Retail Index Study highlights the state of the U.S. retail industry and projects what the balance of the year is likely to hold. 

The 2020 Index values started out with a big jump from 128.2 in December to 132.6 in February, indicating an optimistic 2020.

It then took a sharp dive in April to 85.7 and 85.9 in May. The July Index value came in at 92.6, up slightly, but cautious consumers are clearly indicating economic concerns.

IBM forecasts the confidence level to fluctuate around 90.0 until a vaccine can be developed.

There is good and bad news. The data points to a weak overall 2020 retail performance with a few categories exceeding expectations. Grocery, spirits and building materials, all driven by ecommerce.

The IBM data estimates department stores are projected to decline by over 60% during the holiday season, compared with 2019. There has also been a major shift in consumer purchases as categories like clothing decline in importance.

Groceries are projected to see 12% growth during the holidays. Alcohol sales also will rise by 16%, and building materials and home improvement by 14%. In fact, the price of lumber across the country in the past month rose between 20% and 40%, according to numerous building contractors, unrelated to IBM’s data.

Sports and hobby equipment sales will rise by 1.51%, total clothing by 1.04%, and pharmacy by 3.59%. All other categories -- including health and personal care, during the holiday season -- will see a year-over-year decline.

During the entire fourth quarter, projected growth jumps higher. Building materials are forecast to rise 19.17%, spirits by 16.79%, grocery items by 13.45%, sports and hobby by 1.57%, total clothing by 1.12%, and pharmacy by 2.26%.

IBM estimates the highest declines are in men’s apparel by 80.15%, department store formats by 71.50%, footwear by 50.40%, jewelry at 51.33%, and children’s by 49.84%.

The real estate market experienced an unexpectedly strong June. Recent favorable reductions in interest rates have home sales moving despite a lack of inventory of existing homes and overall increasing home prices, according to the data -- trends that bode well for home furnishings sales.

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