Independence Day on July 4, 2020 will be the second shopping holiday (Father’s Day being the first) on the US retail calendar to test the strength of consumer demand post lockdown. It is also supposed to be the last big US sale event until Amazon Prime Day 2020, which is expected to be pushed back to September. Since Independence Day falls on a Saturday this year, Friday (July 3) will be a public holiday, so Americans will get a three-day weekend to celebrate with family and friends.

The Holiday in Context: Growing Optimism with the Easing of Covid-19 Restrictions

At the time of Easter and Mother’s Day, consumers had limited options to celebrate as shelter-at-home orders were in place and nonessential businesses were shut due to coronavirus lockdowns. As a result, we estimated deep declines for spending on those events. However, by Father’s Day, many US state governments had eased lockdown rules and allowed businesses to reopen, including retail stores and restaurants, but with reduced capacity or curbside pickup only. With the easing of restrictions, consumers appear to be slowly regaining their optimism. In May, growth in total US retail sales excluding gasoline and automobiles turned positive on a year-over-year basis: Sales were up 1.7% versus April’s 5.2% decline. In the wake of the Covid-19 crisis, we expect consumers to shop online significantly more this year compared to in-store shopping—be it for food, alcohol or apparel. Most Americans celebrate Independence Day by decorating their homes with American flags, dressing up in patriotic attire and attending turning up the music and having people over for barbecues or all-day picnics. Furthermore, there are parades, fireworks, beach parties and music festivals. Food comprises major consumer spending on this day; food is usually cooked outdoors on grills and consumed throughout the day at regular intervals in a potluck style.

• Prior to the coronavirus crisis, Independence Day had seen year-over-year increasing consumer spending on food, including barbecues, cookouts and other picnic provisions, from 2014 to 2017. However, in 2018 and 2019, the holiday saw 2–3% year-over-year declines in consumer spending on food, according to data from the National Retail Foundation (NRF).
• We estimate that this year, Independence Day spending on food will total $6.2–6.5 billion (and the NRF estimates $6.5 billion), versus the $6.8 billion that the NRF estimated for 2019, implying a decline of 4–9%. We believe that social distancing will impact events such as outdoor gatherings, firework shows and parades, as well as vacations and backyard barbecues. Many cities and towns in various states, such as Massachusetts and New Jersey, have canceled their Independence Day activities, such as parades and fireworks. Ongoing protests might have negative impacts on smaller-scale events in some neighborhoods.
• In addition to food and beverages, the occasion offers opportunities for other sector retailers, such as home goods, to boost sales and make up for business lost due to the pandemic.
• In 2019, nearly 49 million people travelled for vacations and road trips on Independence Day, according to the American Automobile Association. We expect travel and vacations to be subdued this year.

What Brands and Retailers Are Doing for Independence Day

In addition to food, Independence Day is also an important opportunity for retailers to sell all manner of products, from furniture to home appliances and laptops. Costco Wholesale has launched a members-only savings offer on the purchase of home appliances between June 24 and July 26. [caption id="attachment_112009" align="aligncenter" width="700"] Costco’s “4th of July Appliance Savings” offer for members
Source: Costco Wholesale[/caption]   CVS Pharmacy (owned by CVS Health) is offering themed red, white and blue snack boards for Independence Day. [caption id="attachment_112010" align="aligncenter" width="700"] CVS Pharmacy’s red, white and blue snack board for 4th of July
Source: Pinterest/CVS Pharmacy[/caption]   Home Depot is offering substantial discounts for various products featured under its “Red White and Blue 2020” list, including home appliances, patio, paints, grills and tools. [caption id="attachment_112011" align="aligncenter" width="700"] Home Depot products featured under its “Red White and Blue 2020” list
Source: Home Depot[/caption]   Like every year, Macy’s will hold a fireworks show on July 4 near the Brooklyn Bridge in New York City, which will be aired on television and livestreamed on platforms such as YouTube. Sam’s Club is offering “July 4th” savings of up to $1,000 on the purchase of furniture, appliances, mattresses and more. [caption id="attachment_112012" align="aligncenter" width="700"] Sam’s Club’s “July 4th Home Event”
Source: Sam’s Club[/caption]  

What Retailers Can Do To Encourage Consumer Spending for Independence Day

Inform Consumers about Safety Measures within Stores Although stores have begun reopening across the country with restrictions, many consumers may still be hesitant about shopping in stores. Retailers can emphasize and educate customers about the health and safety protocols that are being implemented in their stores, to alleviate the fears that shoppers might have of being in close proximity to others. Clear Excess Inventory through Multibuy Promotions and Discounts Independence Day deals, coupons and discounts will play an important role in luring customers, as many furloughed Americans may be looking to make savings on every purchase. Retailers can look to clear excess inventory and recover sales for products that they could not sell during the lockdown by launching multibuy promotions in seasonal categories such as apparel—for example, “buy one, get one free” or high-percentage discounts on a second product when the consumer buys one. The limited-period offer may prompt prospective buyers to make purchasing decisions quickly to avoid missing deals. Highlight Independence Day Special Product Offerings Retailers could put together gift bundles that constitute a special experience, such as a “picnic at home” basket or an American-themed party items, including American flag hats, paper plates, napkins and balloons, for a backyard bash. Patriotic Presentation Retailers across multiple sectors could make highlight their patriotically colored merchandise (red, white and blue) by displaying it clearly in store or through online advertising. Retailers can also offer something extra in the shipping packages or shopping bags of consumers. For example, they could simply add a free American flag to any online order; these little things can convert consumers from one-time shoppers to loyal customers. Patriotic apparel remains one of the most popular purchasing categories on Independence Day. In 2019, about 52% of Americans owned patriotic apparel, slightly up from 51% in 2018, according to NRF data. We expect the demand for patriotic apparel this year will remain similar to last year. The “Black Lives Matter” protests could have some impact in how patriotism is represented this year in marketing and products—for example, Amazon is selling “Black Lives Matter” T-shirts featuring the American flag. Furthermore, with states mandating that shoppers wear face masks in public, patriotic or American flag-themed masks could be a bestseller on Independence Day. [caption id="attachment_112013" align="aligncenter" width="700"] Source: Amazon[/caption]   Drive Consumer Engagement through Games, Contests and Exchange of Ideas or Pictures Brands and retailers could capitalize on engaging games, contests or polls—or simply use inspiring messaging about the day—to help drive sales. Retailers could also ask consumers to share their ideas about celebrating Independence Day or post pictures of social distancing/safe practices using retailers’ products that can be posted online. This user-generated content can be used to boost consumer engagement both on social media and the company’s website. Collaborate with Other Businesses Retailers can collaborate with other businesses to spark sales during Independence Day. Food retailers could partner with restaurants and breweries to offer exclusive Independence Day-themed food or beverages.

What We Think

The significance of Independence Day for retailers cannot be understated: It is an opportunity for brands and retailers to raise awareness among consumers and boost sales. Increased US consumer sentiment hints at consumer optimism for this holiday, with many people expected to celebrate Independence Day. Retailers could use this opportunity to clear excess inventory and make space for fresh, in-season stock—gradually making up for the “lost” shopping days that were caused by Covid-19 this year. Brands and retailers can offer multibuy promotions and discounts, collaborate with other retailers and create special Independence Day packages to further drive sales. We also recommend that retailers download our retail calendar of important dates, to ensure that they are staying ahead of opportunities and enhancing consumer engagement every month by focusing on key events.