As we are heading to the end of 2020, it means the holiday shopping season is right around the corner; however, there would be unlikely that crowds of people queuing at malls and department stores, waiting to bring home the biggest 'door-crasher' bargains for the holidays. The 2020 holiday shopping season is unlike any in living memory and could become the most digital shopping season in history.
With the ongoing lockdown in many countries against the second wave of the virus, social distancing restrictions, and remote working situations, the global pandemic has significantly affected consumer buying patterns, product discovery, and decision-making processes as holiday shopping begins.
As retailers are planning accordingly, the success of the holiday sales depends on whether they are able to stay agile and pivot to serve customers best, strengthen fulfillment and supply chain capacity, redesign consumer experience by leveraging advanced technology, and embrace the challenges to capture growth in unusual conditions.
The holiday is a crucial test to see how COVID has impacted purchasing and whether these changes will stick for the long term. While the landscape for holiday sales remains uncertain, it is also the last and best chance retailers and brands will have to make up for the significant amount of lost ground they experienced this year.
Shopping Will Start Earlier
Many brands and retailers are starting holiday sales earlier than ever this year, a month before Black Friday. Amazon PrimeDay’s move to October has prompted simultaneous sales all over the retail industry. According to Edited, the average discount in the US was around 40-50%, compared to 20-30% this time last year. Walmart decided to extend Black Friday and Cyber Monday into a three-weekend series of sales in both online and offline channels. Similarly, Macy’s announced to start its Black Friday promotions at the beginning of November.
An early holiday sale indeed brings more incentives for brands and retailers, such as less competition from rivals, mitigating the worst of the shipping crunch, and rising costs from carriers during peak time.
Convenience, speed, and availability are the top three factors driving consumer shopping habits this year. Therefore, they will start preparing and shopping earlier than usual to ensure safety, avoid crowds, and lessen the impact on their wallets. “We’ve seen some data that says customers will be looking for value earlier and participating less in that all-important one-day event in stores,” Bed Bath & Beyond CEO Mark Tritton said in an interview. “It’s a very different season. And I think we’re all going to learn together as we go through it.”
Consumers Plan to Tighten Their Holiday Budget Belt
Although the labor market has recovered somewhat, several families are continually facing deep financial hardship due to the effects of reduced income, job loss, laid off, temporary closure of the workplace, etc. Many U.S. consumers are not planning to increase their spending this festive season, even decrease their budgets by 18%,according to KPMG’s report.
On the other hand, Accenture’s survey results show that 44% of shoppers want to spend the same this year, whereas 41% plan to spend less, and a small minority (15%) of consumers will increase their budgets on holiday shopping.
Another research by a global advisory and research firm, Coresight Research, has revealed that among Millennial and Gen Z consumers, more than 40% of them expect to reduce their holiday shopping expenses. PwC’s annual holiday report has discovered that 55% plan to spend the same or more this holiday, while a considerable proportion,40%, will spend less.
Overall, an average half of the consumers remain optimistic in the wake of the pandemic and will stick to their holiday shopping budgets as last year or slightly increase it. Meanwhile, the other half is still wary and plans to spend less, leading to two possible scenarios brands and retailers can expect going into the pandemic-era festive season.
Two possible scenarios for 2020 holiday shopping
According to Deloitte, there are two predictions that brands and retailers should anticipate. The first scenario is the holiday season remaining relatively flat with just 0-1% year-over-year sales growth due to continued customer concerns about the ongoing unemployment, economic crises, expiration of unemployment benefits, and uncertainties about the roll-out of the COVID-19 vaccine. Customers are likely to shore up an emergency fund for unexpected situations in 2021, leading to doubling their saving rate and lowering their spending on holiday gifts.
The second scenario is more upbeat with 2.5-3.5% year-over-year sales growth if there is an official approval of an effective COVID-19 vaccine and treatments or more unemployment insurance benefits from the government. Moreover, consumers could expect to use the holiday as an opportunity to “revenge spend” on holiday gifts and consumable products with money they would otherwise spend on travel and experiences.