Retailers and shoppers alike normally look forward to the holiday shopping season. Needless to say, this shopping season will be very different than seasons past. Lauren Freedman writes, “As retailers find themselves mired in the coronavirus, their reality is often based on the sectors they sell in, whether they are virtual or store-based, along with the liquidity of their business. No matter the circumstances, this is the time of year when retailers start to think about their holiday plans and how to prepare for what promises to be an unprecedented holiday season.”[1] Several major retailers have already announced they won’t be open on Thanksgiving Day — a day that has been a boon for retailers the past several years.
Staying closed on Thanksgiving is just one of the early bets retailers must make about which shoppers will be purchasing items this holiday season, what they will be buying, and how they will be making those transactions. The staff at PYMNTS.COM notes, “Although no major retailer has gone on record yet about their expectations for the 2020 season, some signs are already pointing to pretty significant changes. The first change will affect Black Friday, the day after Thanksgiving, when retailers normally launch the holiday shopping season with huge discounts that attract massive in-store crowds. To paraphrase REM, ‘it’s the end of Black Friday as we know it, and I feel fine.’ It’s a safe bet that Black Friday will be nothing like previous years, if it happens at all.”[2]
How will consumers be shopping?
It should come as no surprise that many analysts believe consumers will prefer online shopping over in-store shopping this holiday season. The PYMNTS.COM staff writes, “We can expect 2020’s holiday shopping season to move online dramatically. How much? That question is better answered by epidemiologists than retail forecasters.” Angie Tiwari adds, “The pandemic has given way to a huge spike in digital sales and engagement, with online sales growing 76% in June. Since stores have reopened, some brands are now seeing a slightly more equal balance of store vs digital revenue, while many others are still seeing a 50%-80% decrease in footfall. To cater to the entire customer base, and in preparation for another potential spike in infection, it’s key that retailers offer a way for customers to engage remotely.”[3] Rimma Kats reports a May 2020 survey conducted by daVinci Payments found, “71% of US adults said they planned to do more than half of their holiday shopping digitally this year.”[4]
Just because consumers are likely to take the digital path to purchase more often than they have in the past doesn’t mean brick-and-mortar stores won’t play a significant role this holiday season. According to Freedman, consumers are now familiar with and appreciate omnichannel options. She writes, “Given the increased adoption of omnichannel during COVID-19, one can only project that shoppers are now converts and will expect that these store-based services will continue. In particular, curbside pickup played an emerging role and expectations among shoppers may be that this option will now be available at the myriad of retailers that tested it during the pandemic.” Buy online pick up in store (BOPIS) or pick up curbside have, in fact, become attractive options for shoppers of all ages. Tatiana Walk-Morris reports, “Given shifting consumer behavior and regulatory uncertainty regarding brick-and-mortar openings, retailers have offered BOPIS services to help customers and staffers stay safe. With the forthcoming holiday season fast approaching, experts told Retail Dive that now is the time for retailers to refine their BOPIS operations.”[5]
Who will be shopping?
Freedman writes, “It’s hard to predict which customer will show up this holiday season. One can’t help but think holiday shopper behavior will be a case of the haves and have-nots.” By that she means, people who are employed are more likely to shop than people who have lost their jobs. She adds, “For those that are working and whose families are in a strong financial position, perhaps it will be business as usual. … At the same time, I see another type of shopper who tapers off her purchasing to reflect the more sober times.” To encourage the latter type of shopper, Freedman believes promotions will be the key to success. “Now more than ever,” she writes, “an overarching shopping approach to the holidays may be the pursuit of promotions. Retailers are in a make-or-break situation that may push them to promote early and often.”
When trying to target customers, macro-segmentations, like employed and unemployed people, won’t be particularly useful to retailers. For example, using only employed/unemployed segmentation leaves out retired people, mostly Baby Boomers. That segment has money, isn’t worried about losing their job, and may prove to be a profitable segment to target. Myles Kleeger, president and chief customer officer at Braze, notes, “Braze’s research shows baby boomers are most eager to return to ‘real’ stores — only 18% plan to increase their online shopping post-pandemic — followed by Gen X (35%) and Gen Z (33%).”[6] On the other hand, some analysts believe older generations might try to preserve their retirement income and, therefore, won’t play a major role in this year’s holiday shopping picture.
If retailers decide their fortunes lie in pursuing younger generations this holiday season, Kleeger suggests they should target millennials rather members of Generation Z. He explains, “Almost half of millennials (44%) say they plan to do more online shopping in the future, even after restrictions and health concerns are over. … Gen Z, primarily still at home, may feel less driven by time constraints and safety worries. This group is also more likely to miss the social aspect of in-store shopping with friends.” Kleeger also believes younger shoppers are more bullish about holiday spending. He writes, “Consumer confidence varies with age and there is a stark divide when it comes to thinking about holiday spending this year. One in 10 people over 40 years old (13%) intend to increase year-end holiday spending in 2020. A good 33% of those under 40 years old, however, expect to spend more this holiday season compared with last year. Smart strategists will use modern marketing automation to test differentiated holiday messages and continuously optimize into those that perform best for each audience segment. Avoid defaulting to steep discounts, as seasonal online shopping is more than just looking for the lowest price.”
Concluding thoughts
“So what will the peak trading months and the holiday season look like in 2020?” Tiwari asks. Her answer, “Well… Who knows? What we do know is that retailers, now more than ever, must take a multifaceted approach when planning for peak season.” That means strengthening omnichannel operations and beefing up the returns process. Kleeger concludes, “This holiday season each interaction with a customer presents an opportunity to strengthen the bond with the brand more than ever. Start work now to create seamless cross-channel messaging that demonstrates a contextual understanding of each customer in the moment. A relevant holiday experience is more likely to give the customer a reason to stay loyal into the new year.”
Footnotes
[1] Lauren Freedman, “The Shopper Speaks: So what about the holidays?” Digital Commerce 360, 13 May 20.
[2] Staff, “Retailers Shift Gears – And Digital – For Holiday 2020,” PYMNTS.COM, 22 July 20.
[3] Angie Tiwari, “What will holiday shopping look like in 2020?” jrni, 23 July 2020.
[4] Rimma Kats, “Majority of US Shoppers Will Turn to Digital for Holiday Shopping Needs This Year,” eMarketer, 11 August 2020.
[5] Tatiana Walk-Morris, “Can summer BOPIS practices forecast holiday trends?” Retail Dive, 6 August 2020.
[6] Myles Kleeger, “Millennials—Not Gen Z—Present Biggest Ecommerce Opportunity for Holiday Season,” AdWeek, 17 August 2020.
