Like nearly everything in 2020, the holiday shopping season is expected to look very different this year. While many retail stores have historically relied on holiday doorbusters and big one-day deals to sustain their Q4 sales numbers, these normal strategies will likely be thwarted by rising numbers of COVID cases and an enduring anxiety around indoor crowds. A comprehensive understanding of consumer shopping behavior will be key to sales success this holiday season—along with a clear strategy for how to meet these new needs and expectations. Just because business-as-usual won’t cut it this year, that doesn’t mean the holiday season will be a wash. In fact, the demand for cozy home furnishings remains high and many consumers are looking for new ways to regain some semblance of normalcy—wherever they may find it. By carefully reconfiguring their Q4 strategies, retailers still have a chance to come out on top as we close out this strange year.
Key Things To Keep In Mind As You Plan For The Holiday Shopping Season
Prepare For An Extended Shopping Season
In the past, holiday shopping has been geared around specific days—Black Friday, Cyber Monday, Small Business Saturday—but this year the holiday sales cycle is expected to be much longer and less centralized. According to a survey from the National Retail Federation, 74% of retailers are predicting a longer, more drawn out shopping season with nearly half of respondents preparing for consumers to begin their shopping this month. This is, in part, thanks to Amazon’s decision to push its annual Prime Day from July to October—hereby kicking off the unofficial start to the 2020 holiday shopping season. And many of the big name retail chains will be following suit, unveiling more sales both in-store and online throughout all of November.
There’s a number of reasons for this shift. In particular, a more spacious schedule will allow for some in-store shopping while still minimizing the potential for crowding. Consumers remain very concerned about health and safety, especially as COVID numbers are seeing significant spikes in many parts of the country.
While an extended holiday sales season will allow consumers to get good deals without sacrificing their safety, you still run the risk of burn-out. Retailers will have to get creative about how to repackage and repromote their sales in different ways over the course of the season. Just sticking with one strategy may not be enough to keep people’s attention.
People Are Still Flocking Online To Buy
While the jury is out on how much consumers will spend in Q4 this year, there is at least some consensus on where they will spend—namely: online. Ecommerce sales are expected to continue their upward trajectory and log even more significant gains this holiday season. According to some estimates, holiday online sales are predicted to grow up to 35% this year.
“With 41% of consumers reporting decreased comfort with shopping in person, shopping patterns are increasingly moving online with over three quarters of consumers planning to do at least half of their shopping digitally during the 2020 holiday season,” Terence Scroope, VP of Insights at Unruly and Tremor Video, told Forbes.
Retailers need to be prepared for this ecommerce boom. Rather than trying to peddle in-store deals, stores must find new ways to offer their customers exclusive discounts. Retailers that can replicate the excitement of Black Friday shopping online will definitely stand out - but simply ensuring that your ecommerce offerings are intuitive and easy-to-use will put your store ahead from a lot of its competition. According to this article from Forbes, details like simple payment options, chatbots and accurate personalization tools will make a huge difference this holiday season.
Don’t Forget About Shipping
Of course, the online shopping experience does not end when the consumer makes a purchase. Fulfillment plays a major role in shaping consumer satisfaction about your brand. And it is all the more important around the holidays, when orders become increasingly time-sensitive. The added demand for ecommerce has already been slowing down delivery these past few months - and holiday shopping is only expected to put even more strain on the logistics industry.
So, simply put: plan for delivery delays. While many shipping companies are already planning for a spike in sales by hiring more drivers, there’s no certainty that it will ensure on-time delivery. So, as a retailer, you will need to account for potential delays. The most important thing you can do is communicate with your customers. Be honest about estimated delivery times and err on the side of caution, just in case. Supply clear and consistent messaging about when products will need to be ordered to make it on time. And remember: people are more likely to be understanding if you are upfront about the situation before they give you their credit card information.
Retailers can also take the uncertainty of shipping delays out of the equation entirely by promoting buy-online / pick-up-in-store options. This is a great low-risk alternative for last-minute shoppers worried about the risk of spending too much time in-store. The BOPIS model doesn’t just have to be about convenience either. Independent retailers can add a little bit of added festivity by offering gift wrapping options or partnering with a local coffee shop to provide treats outside the shop.
New Financial Situations Mean New Spending Habits
The financial impact of the pandemic has been somewhat complicated. For a lot of people, it has caused significant hardship, as numerous industries have taken a hit and laid off workers indefinitely. For others who were more easily able to transition to remote work, these past seven months have actually been an opportunity to save money - with many optional expenses put on hold (like dining out and traveling). Experts say that the pandemic has effectively exacerbated the income gap, which in turn has impacted shopping habits.
"[T]he consumer market is becoming increasingly polarized between those who are financially secure and able to spend, and those who are having to budget and restrain from buying," said GlobalData Retail Managing Director Neil Saunders, in this article for RetailDive. "At the moment the dynamics from the fortunate group are outweighing those who are less fortunate. This polarization is one of the reasons why budget chains are doing particularly well at the same time as big-ticket purchases at home stores are soaring.”
For many people, the government’s stimulus support was a necessary asset—to both their pockets and the retail industry. With no new support package on the horizon though, this revenue stream may dry up in the months to come. Subsequently, some experts are expecting a sluggish holiday season. A new report from McKinsey is predicting a 25% net decrease in holiday shopping.
But, at the same time, consumer behavior can be tricky. In as weird a year as this one, many people are trying their best to regain a sense of normalcy—which means that many may still be willing to shell out some extra cash on presents in the hopes of keeping traditions alive.
Giving The Gift Of Comfort
The pandemic is far from over; and with the winter months fast approaching, more and more people are preparing to once again hunker down at home. The home furnishings and improvement categories have seen a major sales boom all year—and that increase in spending is not expected to go anywhere anytime soon, says Coresight.
This is good news for bedding, mattress and furniture retailers this winter. While these products may not, historically, be seen as obvious holiday presents—they may be on the top of a lot of people’s lists this year. Experts are predicting that non-traditional gifts will be the way to go this holiday season, with a big focus on items that will help make staying at home extra cozy. And with the demand for bedding already sky-high, there is plenty of opportunity to tap into that interest this holiday season.
It’s Time To Refresh Your Marketing
As any good marketer knows, it’s important to adjust your marketing strategy to meet any changes in consumer behavior. Not only should retailers consider the fact that more consumer will be shopping online this year (i.e. consider more digital advertising), they also need to recognize how to reshape the content of their ads to address today’s needs. While the moment for “we’re all in this together” ad messaging may be over, that doesn’t mean retailers should go back to the same old holiday ads as before. For Cindy Riccio, President & Founder, CRC, Inc., that means moving away from sales-driven messages and more towards engagement.
“The 2020 holiday season can’t be business as usual,” she told Forbes recently. “With the limited ability of people to gather together in large quantities and deciding on what to do to be safe, advertising messaging should not be tone deaf and must be in sync with social distancing. This is a time to be more nostalgic in nature. With less travel due to the ongoing pandemic restrictions and more focus on home, content should reflect the current at-home environment with a genuine, authentic feeling that includes humor and sentimental values.”