Holiday Shopping is Back: Is Your Store Ready?

Holiday Shopping Series – Part 1

Holiday shopping is back with Black Friday just a few weeks away. Even though things will look drastically different from the pandemic-influenced shopping season of a year ago, it will feature some of the same trends and challenges. 

Part 1 is a little about what to expect. 

Lessons learned 

With the pandemic working its way out of the latest surge, it’s a good idea to look at how the first COVID Christmas went. 

  • Black Friday was truly black. Foot traffic fell by over 50%. Mall traffic was down over 53%. And a lot of large retailers actually discouraged shoppers from crowding their stores. 
  • Online shopping exploded. Thanksgiving e-commerce set a record. 
  • New forms of in-store shopping appeared. Click-and-collect options such as buy online pick up in-store (BOPIS) and curbside pickup boomed. Retailers offering these options increased their online sales approximately 26% more than those that didn’t. 

What’s in store for 2021?

More sales!

Nearly every retail expert is predicting that holiday shopping will increase this year. Deloitte is forecasting a 7% to 9% rise. The analytics company says sales could reach up to $1.3 trillion with e-commerce accounting for 11% to 15% of it. 

Mastercard estimates a 7.4% rise with in-store sales increasing 6.6% over 2020. 

A longer season 

Once upon a time, retailers were either chastised for pushing the holiday shopping season from Black Friday into Thanksgiving Day. Last year, worries about over-crowded stores, along with Amazon’s move of Prime Day from mid-summer to October, extended holiday shopping to the start of November or earlier. 

Many retailers began offering their Black Friday discounts immediately following Halloween, effectively doubling the length of the holiday shopping period. And many shoppers loved it. The National Retail Federation (NRF) reported that over 40% of holiday shoppers said they started hunting and gathering gifts earlier than normal. 

“Retailers have demonstrated their commitment and ability to ensure safe shopping environments for their customers and their associates,” said NRF President and CEO Matthew Shay. “With consumers looking to fulfill their gift lists earlier this year, retailers are prepared to meet that demand with deep discounts, robust inventory and providing the best experiences possible whether in store or online.” 

Black Friday

The days of packed streets and crowded stores on Black Friday are waning due to the pandemic and changing shopping trends.

Black Friday even darker 

As holiday shopping deals are offered earlier, the novelty and importance of Black Friday and Cyber Monday are fading. 

Results of a survey from Sitecore posted in Retail Customer Experience show that 80% of marketers think the demise of Black Friday will continue. They say it has become associated with negative shopping experiences. Eight-five percent are using the pandemic to “reset” their after-Thanksgiving practices. And only 60% are planning Black Friday promotions, a figure that is down 17% from 2020. 

The increase in e-commerce in 2020 has also tarnished the sheen of Cyber Monday. Consumers accustomed to shopping online are no longer willing to wait until the Monday following Thanksgiving for good deals. 

High tech toys

The pandemic pushed many shoppers online when physical stores closed, and merchants responded by adding e-commerce options to their websites and integrating them with their inventory management systems. Those integrations allowed many stores to seamlessly monitor in-store and online sales. 

The Small Business Performance Against Customer Expectations report (PACE) from Worldpay from FIS, the globe’s leading payment processor, says about 60% of retail merchants responded to the shift in shopping preferences by opening new lines of business or changing their products and services. And about three-quarters of those merchants benefited in some way from customers changing their shopping habits. 

The changes included adding: 

Z

Online marketing/promotions - 58%

Z

Additional security – 34%

Z

Marketing automation – 34%

Z

Mobile payments – 14%

Z

Online sales – 10%

Source: Worldpay from FIS PACE report 
How the pandemic benefited small businesses 

86% adopted new technology to improve productivity and effectiveness

84% streamlined business operations to improve efficiency and reduce costs

77% benefited from customers focusing on shopping local

65% changed their operations or business models

57% altered or expanded their products and services

Source: Worldpay from FIS 

merrymobile eChristmas 

Holiday shoppers looking to avoid store crowds in 2020 drove e-commerce 47% higher than in 2019. Over half of that jump came from people purchasing from their phones, according to Adobe. 

Statista is forecasting sales from mobile phones to reach roughly $3.5 trillion in 2021 and account for 73% of total e-commerce sales. All totaled, eMarketer expects U.S. holiday shopping alone to reach a little over $1 trillion with e-commerce up over 11% from 2020 to $207 billion. 

“My research team has seen the shift towards digital shopping is here to stay,” says Debadeep Bandyopadhyay, a Google research analyst. “People aren’t just going online to buy. They are browsing. There’s sustained interest in online window shopping and searches for inspirational shopping ideas.”  

So, stores need to be prepared to meet people where they live. That’s on their phones! 

CX Marketing Consultant Monica Deretich offers a couple of mobile-specific tricks to optimize your marketing efforts. 

It’s best to optimize your mobile site and messages for dark mode display to ensure a “satisfying user experience” no matter what device they use.

Because almost half of all emails are viewed on a smartphone, emails should be designed to be viewed on them.

Connect all your shopping touchpoints – email, text message and websites – to ensure a cohesive customer experience.

High cost of doing business 

Stuff is going to cost more this year. Inflation will add to the price of all products from raw materials to manufacturing to shipping to labor to sales and delivery. 

Inc.com says this year it will cost U.S. retailers and extra $223 billion more than it did just a year ago. Salesforce forecasts that $12 billion of that total will be an increase in raw materials and ocean freight will grow by $163 billion.

Holiday package delivery

Delivery of products purchased online is expected to strain parcel services.

Delivering the goods

Ever since the pandemic broke the supply chain, delivering the glut of e-commerce goods ordered digital shoppers has been a challenge at best. It’s not supposed to get any better when the holiday shopping starts in earnest, either. 

UPS CEO Carol Tomé told Retail Dive that peak season deliveries are expected to exceed capacity by roughly 5 million pieces per day! 

“Our peak planning is well under way,” Tomé said. “We are lining up the aircraft we need to lease to manage the volume, we’re lining up all the rental equipment that we need to have in place to handle the volume and, of course, the people side.” 

The Postal Service is adding 112 new package sorting machines to handle the holiday workload.

Stores that offer buy online, pick up in-store and local delivery post much higher online conversion rates. Also, a Total Retail survey shows that 85% of shoppers who click-and-collect make additional purchases when they pick up their orders.

So, what’s under the tree?

After 18 months of being cooped up, the experts say American consumers will be spending on wants, not needs. Apparel, which reverted to sweats and Crocs during the pandemic, will boom. People will want to travel again, so adventure wear, sporting goods and luggage will be strong again. Frivolous spending on jewelry, designer watches and sneakers will also spike. 

Spending on home improvements, which boomed when so many people began working from home, will continue as many homeowners look to entertain guests for the first time in over a year.

 

Top five last-minute holiday purchases

Gift cards - 57%

Gifts for family - 44%

Gifts for friends - 35%

Recipe ingredients - 35%

Alcoholic beverages - 35%

Where are they buying?

Retail Dive says shoppers will diversify their approach to holiday buying depending on what they’re shopping for. 

Electronics: 38% Online - 20% In-Store - 33% Both

Source: Retail Dive 

Toy Gifts: 29% Online - 26% In-Store - 33% Both

Source: Retail Dive 

Food/Ingredients: 20% Online - 47% In-Store - 22% Both

Oddly, nearly half of consumers consider in-store shopping more convenient. However, not surprisingly, 57% think they get better deals online. 

Takeaway

Like last year, this holiday shopping season will be like no other. The increase in digital shopping will still be prevalent, but shoppers will be returning to brick-and-mortar stores and experts are predicting record sales. Stores will be trying to satisfy consumer demand with a supply chain that is iffy at best. However, there are ways for merchants to ensure they have a happy holiday. The second part of this series will offer suggestions on how small businesses can ensure holiday success. 

brian bullock 

Author