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Will Massive Payroll Hack Spoil Super Saturday?

This year’s Super Saturday might face an uphill battle.

On Wednesday, Ultimate Kronos Group said its private cloud-based payroll program was hacked, meaning employers using the system likely won’t be able to send paychecks and affected employees will have trouble clocking in without some sort of backup plan. Given that Kronos is one of the biggest H.R. firms around, Sunday’s ransomware attack just days before Super Saturday could hardly be worse, though it wasn’t immediately clear how many companies and workers are affected. USA Today reported that Puma is a Kronos user. Kronos has notified authorities and is working with cyber securities experts.

For many employers, Friday marks the final payday before Christmas. Kronos said the ransomware attack might keep its systems offline for several weeks, and the disruption is also expected to affect when year-end bonuses make their way into workers’ bank accounts. What’s more, the cyber attack is likely to prevent many companies from accurately tracking the overtime hours many holiday-season workers clock during the peak season.

The hack comes as the National Retail Federation (NRF) reiterated its bullish stance on holiday sales.

“We expect demand will remain strong through December, even though consumers started holiday shopping earlier than ever this year,” NRF president and CEO Matthew Shay said. “Despite the rise of the Omicron variant, increased vaccination rates combined with retailers’ ongoing safety protocols and procedures have resulted in consumers who feel they can continue to shop safely and conveniently. We believe that holiday sales this year could grow as much as 11.5 percent over 2020.”

And NRF chief economist Jack Kleinhenz noted that consumers’ “financial condition remains healthy and neither stubborn inflation nor Covid-19 appear to have derailed holiday spending despite both being top of mind.”

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NRF expects more than 148 million consumers will shop in-store and online on Super Saturday, a drop from the 150 million consumers expected to shop last year, but a slight uptick from the 147 million projected in 2019.

Walter Loeb, a onetime retail analyst turned consultant, isn’t convinced Super Saturday will be as busy as in years past, given the surging coronavirus infection rates in states like New Jersey and New York, where restaurant, entertainment venue and workplace re-closures are on the rise. Plus, as “more consumers became aware of possible supply chain issues, many made a point in shopping early,” especially in October, he said. While off-price retailers could still attract bargain-hunting shoppers in the final stretch before Christmas, Loeb believes a muted turnout is likely— and comparable to Black Friday‘s lackluster traffic.

However, Marni Shapiro, founder and managing partner of The Retail Tracker, told attendees of Wednesday’s Retail Marketing Society (RMS) webinar on the current state of retail that “in person” shopping seems to be back.

“I’m seeing more men shopping in person and older people back this year versus last year, but it’s across the board,” she said. “Everybody is shopping. They’re buying gifts. There is just a sense that we missed the holidays last year, and people want to make up for it, so to speak.” Shapiro believes footfall should improve over the next two weeks, although “not to levels seen in 2019 or before.”

Well-publicized supply chain problems might get some credit for drawing people back to brick and mortar, she said, citing weekly deliveries refreshing Lululemon’s stores and giving shoppers a reason to see what’s new. “There is a different cadence to the way retailers are operating this year,” she added. “I don’t think there’s any real way to compare this year to 2019 because there are too many outliers right now.”

And where Christmas falls on the calendar this year could also give retail a boost.

“Many people” will be off on Friday, “the day before Christmas,” which could make Christmas Eve a bigger shopping day this year, added Marie Driscoll, co-panelist on the RMS webinar and managing director for luxury and fashion at Coresight Research Inc. By contrast, a mid-week Christmas usually means consumers have less time to shop on Christmas Eve. Given that holiday sales have been tracking well, Driscoll wondered if companies should raise their outlooks accordingly. And since many have raised prices, Driscoll said this holiday season could yield the “best-margin quarter that we’ve seen in possibly 20 years.”