Why this holiday season will shatter traditional shopping trends
The holidays are right around the corner and the shopping season has already begun. It’s no surprise that this year will look a bit different than past years when it comes to what consumers are looking to buy, how they are looking to purchase, and what they expect from brands when it comes to the ease and convenience of the shopping experience.
Needless to say, retailers have been cautious about their holiday sales outlook, as they try to predict shoppers’ appetite for celebrating the season and exchanging gifts during a global health crisis and economic turmoil. It has become increasingly important for retailers to harness data and analytics to understand consumer behavior and tailor their customized holiday campaigns and overall retail experience.
Let’s first review the 2019 holiday season based on foot traffic insights we gathered from our proprietary location panel last year.
Holiday shoppers felt the crunch
Holiday shopping was cut short last year. With Thanksgiving taking place so late in the month on November 28th, the period between Thanksgiving and Christmas was six days shorter than the 2018 season (the shortest since 2013). This led to a decrease of in-store foot traffic by 2.09%. Despite the crunch, holiday spending grew.
Black Friday was dethroned
Last year, December 14th was the busiest day for in-store shopping. Black Friday deals weren’t just for those willing to brave the in-store experience at midnight. With retailers bringing Black Friday deals online, shoppers were able to take part in the Black Friday experience without the crowds. For the first time, Black Friday beat Cyber Monday in the number of e-commerce shoppers.1
Department stores continued to struggle
Overall foot traffic to department stores dipped 4.86 % last holiday season in comparison to the year prior. This decrease was consistent with an overall drop in sales which JCPenney reported to land somewhere between 5 and 6 % and Kohl’s reported a .2% decline in same-store sales over the holiday season.
An all-in strategy worked for Kohl’s
Despite a small drop in same-store sales over the holiday season, Kohl’s was a standout amongst other department stores. Kohl’s pulled out all of the stops to encourage shoppers to visit their stores during the holiday shopping season. The retailer kept their stores open 24 hours beginning 7 a.m. on December 21 through 6 p.m. on December 24. In addition to that, Kohl’s offered free in-store pick up for customers who shopped online or via the Kohl’s mobile app until 6 p.m on Christmas Eve. This move seemed to be a smart one because Kohl’s saw a 3.8% increase compared to the holiday season the year prior. (note – they will not be keeping their stores open 24 hours a day for the 2020 holiday season)
What’s “in store” for this year?
According to Deloitte, holiday retail sales this year are forecast to rise between 1% and 1.5%, amounting to between $1.147 trillion and $1.152 trillion.2 However, other reports signify that spend will be down, but there are multiple factors at play. That said, it’s increasingly evident that forecasting is rather volatile with so many variables to consider this holiday season.
“We might want to predict right now. The only thing we can guarantee is that we would be wrong,” said Howard Meitiner, managing director at Carl Marks Advisors and former president and CEO of Sephora USA.3
Priming for the competition: Who will take the reins?
This might very well be one of the longest holiday seasons of note, with competition at an all-time high and retailers feeling reluctant to hold out for the traditional post-Thanksgiving day sales. Retailers have been forced to rethink the usual timelines for Cyber Monday and Cyber Week to help shoppers already looking for special offers and deals this October.
Brands have jumped on the Amazon Prime Day bandwagon, releasing their own sales between October 13-15th to compete with the e-Giant’s largest sales event of the year. Top retailers include Kohl’s, Macy’s, Bed Bath & Beyond, Walmart, Home Depot, and Target. And it’s not just the same deals for all. Kohl’s for instance is taking a tiered discount approach based on loyalty status, and at a time where loyalty is being tested, it’s likely that many retailers will be following a similar approach.
Walmart is also taking a tiered approach, but more from a categorical sales perspective. They are bringing Black Friday online starting Nov. 4 and in stores Nov. 7 with a focus on toys, electronics, and home products. The second event will begin on Nov 11th online and in stores Nov. 14 with a focus on TVs, smartphones, computers and tablets along with items from other merchandise categories. And the third event will kick off online Nov. 25 and in stores Nov. 27.4
But WHO is buying WHAT?
There are stark differences in what items are being purchased from a demographic standpoint. Brands need to consider a bifurcation of consumers given the impact that the pandemic has had on families that may have lost their jobs and can’t afford the types of presents they could in the past. Similarly, lower-wage earners may commit more spend towards necessities, while those with a higher income who traditionally spent more on vacations and entertainment, i.e. concerts, Broadway tickets, etc. may be more eager to splurge on other types of gifts.
Even still, people at all income levels have economized during the pandemic making it difficult to predict purchases. However, not batting a blind eye to the fact that more people have been spending considerably more time at home – a trend that will likely continue for a while – the below have been forecasted to be some of the more popular items that will be purchased during this holiday season:
- Consumer electronics
- Home furnishings
- Outdoor supply and sporting good items (more people are getting outside and camping, hiking, etc.)
- Streaming service subscriptions
- Home fitness equipment
This is in contrast to last year’s holiday retail sales which showed decreases in electronics and appliance stores (-2%) and sporting goods stores (-0.4%).5 Similarly, streaming service subscriptions weren’t top of mind for gift giving and people were not as invested in purchasing at-home fitness equipment.
Leaning in on connection
Emotional connections to a brand are heightened and have reached new levels of sensitivities impacting how brands should be thinking about advertising. In a report from Iterable, 83% of consumers are more likely to purchase from a brand they have an emotional connection to. This stat is mainly attributed to Gen Zers and high earners while older generations are more concerned with pricing and product specs.6
Identifying these consumers is key. The importance of segmenting different audiences based on life events and behavioral shifts – whether through real-world visitation patterns or online consumption patterns – can not only make or break a sale, but ultimately lead to higher customer loyalty. Simply changing the messaging and creative to cater towards these different audiences will have a lasting impact on brand sentiment and loyalty.
Let’s slide into the HOW
If there is one inarguable fact, it’s that e-commerce will be the gift that keeps on giving. Deloitte’s annual holiday retail forecast expects e-commerce holiday sales to generate between $182 billion and $196 billion this season with consumers looking to spend more online than last year – and likely than ever before.7
While it’s evident that online shopping will soar, click-and-collect / BOPIS / Curbside pickup will be one of the most popular methods of receiving items. eMarketer expects click-and-collect growth to be 60.4% – almost double of what they reported earlier in the year, with sales reaching $58.52 billion.8 Moreover, with the surge of online shopping, customers should be prepared for delivery delays and surcharges – a stronger reason for retailers to push for in-store or curbside pickup. To help prepare for this, Target has plans to double the number of store associates devoted to BOPIS and curbside services during the season.
There is also opportunity for retailers to take advantage of store pickup by re-creating the in-store experience for the holidays and employing outdoor entertainment, food stalls, and other initiatives to build a more festive atmosphere outside their store. They could even unlock unique experiences for loyalty members – a great way encourage non-loyalty members to sign up for their program.
Localizing the shopping experience
Brands will be looking regionally and adapting marketing programs on a local level which may bring more consumers in-store to purchase. Given the opportunity, Gen Zers would complete most shopping in-store, demonstrating there’s more to the e-commerce equation than just digital literacy.6 These findings may relate to consumers’ desire to spend more time supporting small and local businesses that lack a digital presence.
Outside of supporting small businesses, localization when it comes to messaging for national retailers will be extremely important. Kohl’s for instance will have different hours of operation at certain store locations on Black Friday, so whatever incentives they are pushing, the messaging needs to be clear for shoppers that live in those areas.
Customer surveys are a great way to understand how people are feeling and what attributes they are prioritizing. In some markets people want value and in other markets health and wellness are more important. Analyzing trends and sales on a more local level will allow retailers to put the customer at the center of decisions.
- Expect the big shopping days to be less important. Big box stores are closing during Thanksgiving and traditional “big sale” days will be more spread out
- Shopping for the holidays will be starting much earlier this year – no more busting down the door for Black Friday deals
- People will be shopping in the middle of the week more and at different times of day given that many are still working from home
- Push towards curbside and BOPIS for online orders will be a major trend, saving retailers money that would have been spent on packaging and shipping
- Public health aspect will have massive implications on where, how, and what consumers buy
- Brand loyalty will be challenged as consumers shopping preferences have changed
- Location and real-time data will be key for retailers this season as regulations will vary for retailers from area to area
- Regionality will be heightened
- More support for local businesses
- Uncertainty on if another stay-at-home order will take place in certain regions
- Local restaurants will be impacted and forced to think of new ways to drive revenue (think: Meal kits for the holidays, etc.)
Think out of the box
We are entering a traditional holiday selling season with nothing traditional about it. Consumer buying behaviors have shifted – both from a what and how perspective – which makes predictions more challenging than ever. Spending will be uneven among consumers, non-traditional gifting will be favored, and loyalty will be tested.
“So, all of this is great and cool and insightful, but I don’t have the tools or infrastructure to bring together all of these disparate data sets to target all these different audiences while understanding their online and offline patterns.” – Anonymous media buyer and/or marketer
Gimbal does, let’s talk.
1 Why Black Friday Had More Online Shoppers Than Cyber Monday, And 3 Other Trends From Retail’s Big Weekend. Forbes. December 2019.
2Holiday Spending Will Hinge on How Much the Rich Splurge and the Poor Cut Back, Deloitte Says. CNBC. September 15, 2020.
35 Retail Holiday Predictions for 2020. Retail Dive. October 19, 2020.
4Walmart Divides Black Friday Deals Into 3 Separate Events That Kick Off Online. CNBC. October 14, 2020.
5NRF Says 2019 Holiday Sales Were Up 4.1 Percent. National Retail Federation Press Release. January 16, 2020.
62020 E-Commerce Holiday Shopping Trends. Iterable. September 29, 2020.
7A Tale of Two Holiday Seasons: As a K-Shaped Recovery Model Emerges, Consumer Spending Heavily Bifurcated. Deloitte. September 15, 2020.
8Majority of US Shoppers Will Turn to Digital for Holiday Shopping Needs This Year. eMarketer. August 11, 2020.