How retailers can prepare for a digital holiday shopping season

How retailers can prepare for a digital holiday shopping season

Written by Giada Pezzini | 10 November 2020

   

Holiday shopping is massively moving online. As retailers gear up for their busiest time of the year, statistics from global consultancy firms such as Deloitte and Forrester tell the same story: shoppers will visit fewer physical stores, and spend more time browsing and transacting online.

PYMNTS, which tracks consumer spending attitudes and behaviors, found that at the beginning of the pandemic in March, only 12% of shoppers planned to shift their retail shopping from in-store to online. That number has since risen to 42%.

Deloitte also reports a marked interest in online and contactless solutions. The number planning to use curbside pickup has more than doubled year on year, and nearly two in three consumers plan to spend most (72%) of their holiday budget online, leaving just 28% of the budget for in-store purchases.

“This holiday is going to be unlike any holiday season I think any of us have ever seen before” Chip Bergh, CEO at Levi Strauss & Co.

Here are four holiday shopping predictions, with our tips on how to make the best of this unpredictable holiday season:

1. Enhance your digital capabilities

This year, Deloitte expects holiday e-commerce sales to rise by 25% to 35% compared to last year. In the U.S. alone, some US$182-196 billion is up for grabs for retailers with an online presence.

To make the most of this opportunity,

  • Use a marketing mix to drive consumers to your e-commerce sites: test and try email marketing campaigns, influencer-driven campaigns, social media marketing, flash promotions, personalized offers.
  • Be ready for potential surges in online traffic throughout the shopping season. Review your eCommerce, and make sure that the website can deliver the same speed and quality of experience even at peak levels of traffic.
  • Think about adding Augmented Reality and Virtual Reality capabilities, as they can tip consumers towards a purchase more effectively than, for example, reviews or recommendations. Tools to consider include virtual try-ons, the ability to place virtual items in real-life environments, and 3D renderings of products that can be flipped and turned.

2. Prepare for earlier shopping with earlier promotions

This year, a third of consumers said they expected to start their holiday shopping earlier than usual, a study by Coresight Research reports. Retailers have been trying to push the trend to encourage more shoppers to get shopping early on.

Target and Walmart started running holiday deals ahead of Amazon’s popular Prime Day sales in October. Best Buy CEO Corie Barry explained the rationale behind this strategy: “What we’re trying to do is smooth out and make this holiday longer, a little less peaky, so that you have hopefully more ability to have shoppers in your stores at controlled levels,” he said in an interview with NBC News.

The U.S. National Retail Federation initiative called “Shop safe, shop early” appealed to consumers to start their shopping early. The main goals, they said, are to avoid overcrowding in stores, and to avert a last-minute surge in online purchases that could lead to shipping chaos.

“In a year that has been full of uncertainty, we encourage consumers to avoid the last-minute stresses of the holiday season like long lines and shipping delays,” said NRF president and CEO Matt Shay. “Retailers are ready with inventory and sales, and there’s no reason to wait until Thanksgiving weekend to kick off your gift shopping.”

As big in-store themed events are unlikely to happen this year, retailers can encourage shoppers to get started with their shopping early with

  • Promotions valid in November, including special offers on shipping
  • Dedicated pages to get shoppers in the holiday mood
  • Personalized deals sent to customers via email and on social media
  • Personalized recommendations that use previous shopping data on your eCommerce pages.

3. Think (small) products over experiences

Gifting experiences, such as a spa weekend, a ticket to a concert or a zipline ride, had become increasingly popular in recent years. That quickly changed. A poll by Coresight Research found that in 2020, 7 in 10 people will shift back to spending money on products rather than services. Categories expected to draw the most revenue include, unsurprisingly, home-centered items: home fitness equipment, lounge-wear, beauty products, desk accessories and home décor.

The changed circumstances around how people exchange gifts could also affect the type of items that will sell best this holiday season.

“The consumer is used to buying all these gifts, wrapping them and putting them under the tree,” said Michael Brown, a partner at consulting firm Kearney. “But even gift buying might be suppressed as we have Zoom gatherings, and families don’t get together, so they send smaller gifts.” Larger items, on the other hand, may be more suitable as online purchases, which can be shipped directly to the recipient from the eCommerce site.

4. Create low-contact in-store shopping experiences

According to research by Ipsos Retail Tracking, the majority (53%) of holiday shoppers will choose stores that offer contactless shopping. Traditional bricks-and-mortar retailers will need to rethink all points of contact, and lean on their digital capabilities more than in previous years if they want to succeed.

Some ideas to consider:

  • Contactless payment options are increasingly popular, and can be easily added to your POS. Update your systems to accept tap-and-go cards and digital and mobile wallets like Apple Pay or Alipay.
  • Self-checkout machines give customers a low-touch option to pay for their items, and help reduce the risk of long queues forming at the register.
  • Contactless home delivery doesn’t have to be just for eCommerce purchases. If you have already put a delivery system in place, consider offering the option to shoppers who visit your stores and don’t want to lug items around. It may even encourage them to go bigger than planned.
  • Buy online, pick up in-store options boomed during the pandemic. Whether you go for click and collect (with pick-up happening at a designated desk inside the store), curbside pickup (where the customer drives to the store and waits in the car while staff members put the items in the trunk) or a different solution altogether, what matters is that you find a way for your customers to put their hands on your products fast, safely and conveniently.
  • Special shopping times. Reduce the risk of crowding in store with special extended shopping hours. You can also take the idea from supermarkets and set special shopping times for vulnerable groups, so they can do their holiday shopping safely.

Preparing for the future

This year’s holiday season will be like no other before – but it may shape the course for more seasons to come. The revolutionary shift in shopping habits towards online and contactless which we have experienced in the past few months won’t go away any time soon.

“It’s a very different season. And I think we’re all going to learn together as we go through it.” Mark Tritton, CEO at Bed Bath & Beyond
The good news is that retailers have shown that, when the situation gets critical, they can be quick to adapt. They now know that digital transformation plans don’t need to take years of analyses and what-ifs: one must overcome their fear of change to future proof their businesses and grab opportunities when they are available. Do you need help with your digital transformation? Contact us.

 

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