We’re currently in the middle of the dullest part of the Holiday season for retailers, past Black Friday/Cyber Monday but before last minute Christmas week shopping. So how is it going? A look at US Google Trends search volumes actually suggests “reasonably well”. For example:
#1: Google searches for “macbook” (blue line) and “hp” (red line) since 10/1/19 (right before the holidays last year) to the present:
- Queries for “macbook” and “hp” typically peak the week of Black Friday every year, but this year the high occurred in mid-August ahead of back to school as families prepared for remote learning (highlighted in the box towards the center of the chart below). While the latter is not a “product” per se, we use it as a proxy for non-Mac computer demand.
- Searches for “macbook” and “hp” are currently 18 pct and 19 pct higher than the comparable week in 2019. The former matched the Black Friday week interest seen the prior year, while the latter slightly exceeded it.
Takeaway: demand for laptops and electronics in general have been remarkably and consistently high this year. Even with two huge waves of interest after lockdowns first started in mid-March and again before back to school (that even surpassed 2019 Black Friday levels), they are still seeing more searches than this time last year. While this is great news for 2020, keep it in mind for next year as tech will face especially tough comps throughout 2021.
#2: Queries for “jewelry” (blue line) over the past five years:
- Searches for “jewelry” collapsed after lockdowns first started back in March (as highlighted in the box to the right of the chart below) as stores closed and people stayed home.
- Interest in jewelry nearly recovered its pre-pandemic levels by May and chopped around until early November but broke out in mid-November and thereafter amid holiday promotions.
- Queries have continued to climb higher over the last couple of weeks even after its spike the week of Black Friday, and already slightly exceed 2018 and 2019’s holiday highs.
Takeaway: jewelry is one clear area where there was pent-up consumer demand. Given that searches usually peak the week before Christmas, this year could beat the 5-year high in 2017.
#3: “Clothes” (blue line) over the last 5 years:
- Searches for “clothes” fell to their worst levels of the last five years after lockdowns commenced (as shown in the box to the right of the chart below) amid store closures and people not leaving their homes.
- Interest in clothes recovered to pre-pandemic levels fairly quickly (by mid-April). They even got close to a 5-year high in early June, when virus cases meaningfully improved.
- Queries for clothes waned and were choppy thereafter but hit a new 5-year high the week of Cyber Monday.
Takeaway: even with climbing virus cases, restrictions and social distancing protocols, American consumers are taking advantage of holiday deals on clothes.
The upshot: whether it be a necessary purchase for work or school from home such as a laptop, discretionary purchase like jewelry, or practical purchase of clothes, Americans are showing decent interest in spending money on these items. As for why amid such an uncertain year with the economy and virus, a few thoughts:
#1: While the US unemployment rate (6.7 pct) is still uncomfortably high, the economy has recovered more than half (56 pct) of the jobs lost in the first two months of the crisis. As we continue to highlight in our monthly review of the Job Openings and Labor Turnover Survey, hires and job openings have recovered much quicker than after the Financial Crisis. In fact, job openings as a percentage of the labor force are higher than the peaks of the prior two cycles, and hires as a percentage of the workforce matches the level in January before the pandemic hit.
This is not at all to belittle the financial hardship still felt by the 10.7 million Americans considered unemployed, and we continue to believe that Congress needs to pass more stimulus as soon as possible. But the quicker than usual recovery in the labor market does help explain the continued snapback in retail sales.
#2: While the Federal government gave many Americans a $1,200 stimulus check to help buffer against the financial headwinds of the pandemic, many people saved their money after shutdowns. For example, the personal saving rate climbed to a record high of 33.7 pct in April back to 1960 (as highlighted in the box below) amid uncertainty about the economy and public health crisis. The saving rate is still historically high at 13.6 pct as of October versus 7.6 pct in January but has come down considerably as the economy improves and we get closer to a wide distribution of vaccines. The money that Americans saved early on in the pandemic due to caution and from not going out, they now have to spend on retailers’ aggressive and lengthened holiday promotions at the end of this year.
#3: Most Americans are not taking their usual holiday vacations this year as we continue to show using airline ticket cost data and search interest for airlines using Google Trends. That’s extra money families or individuals can reallocate towards gifts and food for the holidays over the balance of this year.
Bottom line: 2020 is shaping up to be a pretty good holiday season thus far. Even with retailers currently in the so called “dead zone” for holiday shopping (post-Black Friday/Cyber Monday, pre-Christmas week), Google Trends shows interest for everything from laptops to jewelry and clothes is solid compared to last year. Also important: although online shopping took off this year, we’re now entering a period where package deliveries before Christmas grow more unreliable, affording physical stores the opportunity to take advantage of last minute shopping. While retailers’ profit margins are yet to be known amid large and extended discounts to lure in shoppers this holiday season, the demand side is holding up.