Expect delays and surprises with the 2020 holiday shopping season. Once officially kicked off on Black Friday, the day after Thanksgiving, the holiday shopping period continues to lengthen. Consumers know the deals will still be round. According to a survey by Accenture, more than 1,500 consumers, 64 percent said they were less likely to shop on Black Friday than they were in recent years, and nearly 60 percent had lost interest in Cyber Monday shopping. Both days represent a moderate increase of those less likely to shop over the prior year’s survey.
This year, retailers and brands are managing greater uncertainty during the pandemic and recession. The shift from in-store shopping to ecommerce has already outpaced earlier estimates in the face of store closures and social distancing restrictions which began in March 2020.
Now many public health agencies warn the nation about spikes in COVID-19 cases in the winter months when many stay inside and avoid crowds at malls and stores. To best prepare for holiday sales and the upcoming Black Friday, here are four trends and what they mean for retailers, brands and online merchants.
Many consumers have already shifted to the convenience and comfort of shopping online. Forrester estimates relatively flat in-store retail holiday sales. Conservatively, online holiday sales are projected to grow 20 percent to 30 percent over 2019, a significant increase over the prior year’s increase of nearly 13 percent, according to Forrester. Other estimates, such as by Deloitte, put 2020 online holiday sales estimates at 25 percent or greater than the prior year.
For online retailers and brands, without the physical limitations of the pandemic, this means more opportunities to run holiday sales promotions and spread out the deals offered to consumers. According to real estate firm CBRE, the shift to online sales may further erode profit margins and profitability as it is more costly to conduct ecommerce given smaller shipments to consumers versus the volumes and scale of in-store retail. CBRE also notes the shift to ecommerce may send smaller retailers without the infrastructure to 3PLs for outsourced fulfillment and guidance on their strategies as they move toward omnichannel.
As suggested above, Black Friday and the holiday shopping season is already underway with offers extended throughout the period. Stores such as Home Depot and Target are among the retailers which are spreading out Black Friday and other promotional deals through the month of November, and others started in late October.
Store retailers and malls especially need to make up for lost sales by stretching out the holiday season, notes CBRE. Stores are also managing their traffic with low-contact sales, door counts, virtual wait lists and even one-way aisles. Some retailers are also extending their store hours to spread out in-store traffic.
Larger online retailers and brands with their own stores have great opportunities for cross-channel promotions and online marketing of their promotions. Many retailers are forgoing the in-store “doorbuster” offered during tight shopping windows in favor of promoting deals online and in-store for longer periods. Target is extending its Black Friday deals throughout November up until Christmas Eve.
The longer holiday sales period means smaller online-only retailers can still get creative in their online marketing and promotions, as well as developing ways to connect with consumers in person.
The 2020 holiday shopping season highlights the multiple channels available to many retailers with an online presence. Among many retailers, the drive toward omnichannel among has already established new business models. For example, many consumers have already flocked to BOPIS (buy online, pick up in store) services and curbside pickup for convenience and to avoid shipping delays. Given the restrictions of COVID-19, these models support the requirement to keep store traffic low. These models also assume the retailer has the inventory systems and other applications necessary in their delivery and fulfillment strategy.
Many retailers are also showing innovation in how they promote featured products, such as using more prominent displays and signage. Amid the store traffic restrictions, retailers and brands of all sizes are using pop-up locations to make marketing impressions and accommodate more customers. Online-only retailers and brands without their own stores are also getting innovative with pop-up locations.
Other more technological innovations are emerging which will require greater back-office support. These include augmented reality (AR) ad circulars, greater use of QR codes, and even Extended Reality (XR) where shoppers get the feel of an in-store experience from the comfort of their own homes. Voice-activated shopping on devices such as Alexa, are among the innovations which will require more back-office technology support.
The growth of ecommerce this year has already taxed many delivery networks. The holiday shopping season is sure to further strain these systems with delays. Some carriers and delivery companies have already increased their fees in the form of surcharges or permanent rates to cover additional costs for safety and cleanliness.
Despite the tight operating margins of retailers, the current economic environment makes it difficult for retailers to pass on excessive additional costs. Consumers have been known to abandon their online shopping carts in the face of additional fees and surcharges. For more on peak season surcharges by the carriers and how to manage them, see our Peak Season Surcharges in 2020 blog.
For retailers and brands, one remedy to these issues is to communicate clearly with your customers and early on, particularly for ecommerce transactions and those involving multiple channels where shipping fees or shipping delays may be encountered. On the flip side, with a scalable network, it’s also an opportunity to leverage promotions such as free shipping, or merchandise discounts, during select periods in the holiday season or a more limited time period such as actual Black Friday, for example.
Among other communications, email promotions and social media reminders are easily created to remind customers of potential shipping delays, pre-holiday order deadlines, and shipping cut-off dates.
Established and emerging online brands can also align with a transportation and omnichannel fulfillment provider such as Whiplash to take advantage of favorable rates with parcel carriers based on strategic partnerships.