Everyone is accustomed to the holiday selling season starting earlier each year. However, as is the case with most of 2020, retailers will be entering unchartered territory during the next few months and hoping for the best. That’s not to say that all retailers have struggled this year. Online retail giant Amazon had a banner year, as did Walmart and The Home Depot. Retailers with a robust e-commerce presence were the go-to stores for consumers who were shuttered indoors. Particularly, DIYers who had time on their hands and got a sense of accomplishment by working on projects.
Since brick-and-mortar stores are now open, the challenge is to get customers to shop during what is traditionally the busiest sales season of the year. That’s not going to be easy since the game plan is constantly changing because consumer buying habits are evolving due to the pandemic. Even The Home Depot is making significant adjustments. Acknowledging that this year might be different, the chain will be closed on Thanksgiving Day. It is also reinventing Black Friday by extending the timeline from early November throughout December. Sale prices will be offered all season in-store and online. Other major retailers have also opted to close on Thanksgiving to avoid managing large crowds and enforcing Covid-19 restrictions.
Despite facing financial difficulties, consumers are still planning to purchase gifts—59 percent say they will spend the same amount they did last year. According to a Service Management Group research results that surveyed 10,000 consumers, specific trends will impact how consumers will shop this season.
- 47 percent plan to spend $499 or less (24 percent will spend more than $1,000)
- 91 percent plan to shop for other people (31 percent will shop for ten or more people)
- 32 percent of respondents chose value for the money as the most important reason to buy
(14 percent merchandise selection, 12 percent convenience)
- Three in four plans to do most of their shopping online
- 42 percent expect to shop earlier than they did last year
So, what should independent retailers be doing to prepare for the holiday season? Start now by reviewing sales data from previous years to understand better the types of products customers purchased in-store and online. Although shopping habits have changed, this is still the best place to start. Much of this sales data is readily available through POS systems and can be easily retrieved. Of course, adjustments must be made to reflect your current situation and growth potential by category.
By all accounts, the season will start early. “The retailers that use real-time data to understand individual consumer preferences, make changes the data shows are needed, and effectively leverage multiple channels will be much more successful in securing consumer spending this holiday season,” says John Nash, chief marketing and strategy officer at Redpoint Global.
Leverage Multiple Channels
Online shopping will reach a record high this holiday season. Brick and mortar retailers must be innovative to capture more sales in the next few months. This requires a commitment to increase e-commerce sales and view it as an important channel to promote the business’s long-term growth. Even after the pandemic has passed, consumers will continue to shop online. It is best to give them the option to buy online or in-store. Several consumer surveys indicate:
- Sixty-four percent of consumers will spend more online this year than last year
(PowerReviews Holiday Consumer Survey)
- Seventy percent of consumers plan to make the majority of their holiday purchases online via web or mobile (Glassbox Survey)
- One in three Shoppers shop online daily (34 percent). One in five shop (19 percent) multiple times per day (Vertebrae Consumer Survey)
Help Consumers Feel Safe
Consumers who rarely shop online are quickly adapting during this pandemic—including older generations. People like the convenience of germ-free shopping online. However, they are also willing to buy online and pick up in-store. Promote the service that customers can shop online, drive into the pick-up area, and have the merchandise placed in their car without contact. According to MarketWatch, the stores that win on Black Friday will be “any store without a crowd. It could be that customers wait in their cars for their online orders to be delivered. Or that retailers borrow ideas from other industries and provide a way for customers to book shopping appointments, encouraging a lower number of people in the store at once.” For customers who opt to shop in-store, cashless payment options are increasingly popular, especially with younger shoppers.
Be Pro-active and Consider New Options
It’s not surprising that many retailers choose to take a wait-and-see approach to plan for the holidays. However, that doesn’t change the fact that this is a critical season that directly affects the entire year’s bottom-line. A recent survey commissioned by PayPal and conducted by Netfluential reached out to 1,000 small and medium-sized retailers to get their insights about the season.
- 39 percent are proactively preparing for the holidays
- One in five say their business depends on holiday sales, but 57 percent made no preparations
- 70 percent are not planning to hire additional staff or bring back laid-off employees
The report noted that retailers are uncertain about how much shoppers will spend during the holidays and are cautious since one in three merchants expect sales to be lower than last year. However, some retailers are considering new options to generate sales this year.
- Flexible payment options to purchase more expensive items
(ex. Pay in 4, PayPal’s buy now, pay later option)
- 39 percent of merchants plan to sell products on digital marketplaces
- 31 percent plan to make products available through social media apps
Retailers frequently pivot and change strategies to keep pace with customers and provide them with products and services that enhance their lives. Retailers who take a passive approach to prepare for this season may miss the mark of hitting their sales goals.