Four Ways This Holiday Shopping Season Will Be Different

And how brands can leverage retail innovations to prep for an unprecedented holiday season

Richard Yao
Sep 24, 2020 · 8 min read
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Photo by freestocks on Unsplash

If there is one thing that is still universally agreed upon in 2020, it is that the holiday season can’t come soon enough! Not only does it bring its usual (desperately needed) festive cheer, but it signals a definitive end to this exhausting year. As one of the many industries that have been severely affected by the pandemic, retail is especially looking towards the upcoming holiday season for signs of recovery and hope.

COVID-19 has considerably accelerated the ongoing retail transformation, compressing years of behavioral change and platform adoption into six months, and now the impact of that accelerated transformation is set to usher in a holiday season like never before.

Here are the four ways that we believe holiday shopping will be different, along with some actionable takeaways for retailers and brand marketers to take into account in preparation for this unprecedented holiday season.

Accelerated Shift to Ecommerce Will Continue

Holiday retail sales have been shifting from physical stores to online retailers for years, and COVID-19 is accelerating this shift. Many consumer shopping behaviors have moved online in recent months, a trend that is likely to continue throughout the holiday shopping season.

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Source: McKinsey, Aug. 2020

Last year, U.S. holiday ecommerce sales grew to $137.6 billion, accounting for 13.6% of the $1.01 trillion total holiday retail sales in 2019. It wouldn’t be too surprising if that percentage were to exceed 20% this year, given the lingering health and safety concerns of potential in-store crowding that may keep shoppers from shopping in person. The latest data from a mid-September survey by Morning Consult found that nearly half (47%) of Americans plan to do most of their holiday shopping online, with 48% of those that do citing safety concerns as the primary reason why, and 21% citing a preference for online shopping driven by increased usage in recent months.

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Source: Morning Consult, Sep. 2020

In response, retailers need to brace for an influx of online orders and the resulting strain that may put on their ecommerce and logistics operations. Retailers without a robust ecommerce presence will be at a great disadvantage, but even the ones that do should take precautions. Amazon has made fast, free on-demand delivery a staple of its shopping experience so much so that it has become table stakes for retailers. (Even Amazon is taking precautions by enforcing quantity limits on inventory at its U.S. warehouses to ensure space for only the fastest-selling goods this holiday season.) While online shoppers may be accustomed to potential delays in delivery given the circumstances, that doesn’t mean they won’t be disappointed if the gifts they ordered won’t arrive in time. In fact, a CommerceHub survey found 80% of Amazon Prime subscribers said that later-than-expected delivery dates could change their decision to buy from Amazon, potentially moving to another retailer that promises faster delivery. Retailers and brands should consider tapping into the kind of white-label delivery services that companies like Jungleworks and Postmates provide to supplement their existing shipping operations.

Besides on-demand delivery, click-and-collect service, also known as curbside pickup or buy online, pick-up in store (BOPIS), is another retail service whose pandemic-boosted popularity will likely carry over into the holiday season. A recent Google survey found 47% of shoppers said they’ll use click-and-collect services, and an eMarketer forecast indicates that U.S. click-and-collect sales will increase by 60.4% year-over-year. As an advantage over online-only retailers, omnichannel retailers will be able to offer the safety and convenience of online ordering coupled with the reassuring certainty of a same-day pick-up. Some may even offer special discounts for BOPIS orders to alleviate pressure on their delivery operations. To pull this off, integrating a local inventory management system into the backend of ecommerce sites will be key to success.

With holiday shopping accelerating online, new opportunities also emerge to reimagine the holiday shopping experience in online channels. Using live video to showcase best-selling items and offer curated gift guides could be a great way to spark gifting inspirations and drive consideration, whereas AR-enabled virtual try-ons could imitate the fun of browsing and sampling products in store. Whatever the technological tactic may be, retailers should consider how to capture and recreate the magical joy of holiday shopping for a digital-first holiday shopping season.

Some People Will Shop Early

People are looking forward to the holiday season for a reprieve from this exhausting year. Burger King even ran a holiday-themed campaign to celebrate “Christmas in July” aimed to bring people some extra-early but much-needed holiday cheer.

But beyond a universal desire to be done with 2020, there are also two practical reasons for an early start to holiday shopping. One is the aforementioned anticipation of possible delays in delivery may drive some shoppers to start early; the other is the impact of Amazon moving its Prime Day annual sales event from July to reportedly October 13, which will effectively kick off the holiday shopping season given its dominance over U.S. ecommerce. 39% of retailers surveyed by Bazaarvoice in July agreed that “researching and purchasing for the holiday will start even earlier this year,” and nearly a third of those polled “are starting their promotions and sales earlier this year.” Target, for example, has announced that its holiday deals will kick off in October both in-store and online.

In response, retailers and brands not only need to adjust the timing of holiday campaigns accordingly, but also learn to leverage easy-to-scale marketing tools such as direct mail marketing or e-newsletters to grab shoppers’ attention early on. Social media and other digital communication channels should also be properly deployed along with in-store shopper media to drive awareness and clearly communicate advanced sales or other events during an elongated holiday shopping season.

A longer holiday season also means a longer period for shoppers to compare and consider, and the next online store is always just one click away. Consumer loyalty is already in sharp decline due to COVID-19 causing logistics issues and shortages and pushing people to try out new brands. 36.6% of consumers surveyed by Qubit reported they now shop with more brands than they did a year ago, and 46.2% of consumers say they are less loyal to the brands they love. For retailers and brands with a loyalty program, a members-only early access sale is also a great way to drum up consumer interest and make your loyal customers feel extra special (and compelled to shop).

Gifting Priorities Will Shift

Lingering concerns over the economic uncertainty and safety concerns caused by COVID-19 will cast a fog of cautious wariness over this year’s holiday shopping and trigger a shift in gifting priorities. To anticipate this shift and adjust inventory levels accordingly will require data-driven foresight combined with an integrated retail management system.

Had the reopening been successful by now, consumers would likely be shopping for gifts in categories that people have missed out on since March, such as apparel, travel, and out-of-home entertainment. Unfortunately, that does not seem to be the case in the U.S. Therefore, products that offer either escapist entertainment or practical functionality will likely top holiday shopping lists.

In particular, gaming may become a particularly popular category this year as both Sony and Microsoft are set to launch highly-anticipated next-gen gaming consoles. (Although the current debacle surrounding the pre-orders of said consoles should serve as a cautionary tale for retailers and brands to build a robust ecommerce site that won’t crash or malfunction.)

In response to shifting priorities, retailers and brands should consider deploying dynamic creative to target different audiences and drive considerations. In addition, adopting messaging-based customer service and Intelligent Process Automation (IPA) could also help brands better engage shoppers in a timely, high-touch manner that will add a personal touch and help them find the right holiday gifts,

Support for Local Retailers and Shops Will Surge

Over the course of this year, consumers are increasingly recognizing the importance of supporting small local businesses. More than 100,000 small businesses have shut permanently since the pandemic escalated in March, and 48% of U.S. consumers surveyed said “supporting local retailers” is one of the reasons that would convince them to shop in-store. Plus, a Criteo study found that 33% of U.S. consumers discovered small merchants that they didn’t previously know about during the lockdown period.

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Source: Salesforce via ZDNet, July 2020

While this may seem contradictory at first glance to the previous prediction that more holiday shopping this year will happen online, it is important to note that despite ecommerce’s rapid growth, at least 80% of holiday retail revenue will be coming from brick and mortar stores. But this year, small businesses, some of which have long been the backbone of local communities, will be in dire need of the support of their customers for survival, and we expect holiday shoppers to repay in kind. 69% of consumers say the pandemic has made them appreciate small businesses more than before, and 67% say they’re more committed than they were previously to supporting small businesses, according to a Salesforce survey conducted in July.

Therefore, there is an opportunity for brands to lift up local businesses and give back to the community. Specifically in the context of holiday shopping, brands may consider leveraging their digital presence on owned websites and social media to help expand the online footprint of local businesses. Ecommerce solution providers like Shopify are making it easier than ever for small businesses to open an online store, but they also lack the resources to properly market themselves. It is in the best interest of major retailers and regional players to neutralize the competition by striking a mutually beneficial partnership with local businesses. Given time, such partnerships could further evolve into a broader alliance against ecommerce aggregators like Amazon.

All of us are going into this unprecedented holiday season with a lot of uncertainty. Therefore, it is imperative that brands utilize these retail technologies with precision and communicate their plans with empathy so that holiday shopping won’t be one more thing that people need to worry about.

IPG Media Lab

The media futures agency of IPG Mediabrands

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