What does the scenario look like?
In this scenario, a vaccine is made commercially available by September/October and can be administered quickly. Some form of normalcy is restored going into Q4 this year and consumers are generally able to leave their homes. The economy starts to pick up and grows 3-4% faster than the current rate, with Q4 GDP contracting by only 2% or compared to last year.
The unemployment rate drops considerably to around 7%, with a rise in employment across the manufacturing and production sectors, and continued growth in the hospitality and retail industries. Widespread federal assistance, a reduction in interest rates, and additional stimulus funds help several industries get up to speed, and consumer spending increases at the same time.
(We’ll be honest, this is not a scenario we’d hang our hat on.)
Predicted variations in retail trade over time / situation improves
What does this mean? If the situation was to improve going into Q4, we’d expect retail sales to drop by 4%-7% compared to the sales in 2019.
What does this mean for holiday shopping?
In this best-case scenario, overall retail spending during Q4 only declines by 4-7% from 2019. Spending across essential goods is on-par with or slightly up from last year, while sales of non-essential goods declines by 12-14%.
YoY changes predicted for 2020, by retail categories / situation improves
What does this mean? In this scenario, the retail spending on essential commodities would grow marginally by 2% while the spending on non-essential goods would in all probability witness a decline of about 14%.
With an affordable vaccine widely available, significant foot traffic at offline retail outlets is much more likely, though it will likely still be down from 2019. Ecommerce should make up for these declines, thanks to changing trends and increased discretionary spending.
But despite this general optimism, non-essential and luxury retail spending will still likely see a lower turnout. Large investments such as big ticket electronics, cars, and travel are still likely to be significantly down year-over-year, though fashion and beauty categories may see a considerable upswing.