It’s been a chaotic year for retailers (and consumers for that matter), with the COVID-19 pandemic disrupting normal consumer shopping behaviors and causing a worldwide recession. More than a dozen retailers have already filed for bankruptcy, and every day we hear of others at risk if sales don’t pick up. What does it all mean for the upcoming holidays?
It will definitely be different than anything we’ve seen in recent memory. A recent BlackFriday.com survey found that 84% of shoppers said that COVID-19 will directly impact at least one aspect of their holiday shopping behavior, and retailers know that persuading cash-strapped Americans to splurge on holiday gifts will be tougher than usual this holiday season.
2019 holiday sales increased year-over-year; will 2020 be the same?
According to the National Retail Federation (NRF), 2019 holiday sales were up 4.1% over the previous year, and consumers spent an average of $1,048 on gifts for themselves and their families (as well as holiday decorations and candy). Last year’s most requested gifts were gift cards, clothing, electronics, books, and other media, and just over half of consumers reported making their holiday purchases online in 2019, all according to NRF research.
Deloitte’s annual holiday retail forecast predicts that holiday sales are likely to increase 1% to 1.5% overall in 2020, good news for retailers in what has been a rather bleak year. Overall, Deloitte projects that holiday spending will result in sales between $1.147 trillion and $1.152 trillion during the November-January timeframe. Deloitte is also forecasting that e-commerce sales will grow by 25-35% over 2019, generating between $182 - $196 billion this holiday season.
“For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store, and the criticalness of safe and speedy fulfillment,” said Rod Sides, Vice Chairman at Deloitte.
Four holiday shopping predictions for 2020
We researched what retail experts like Deloitte are predicting for holiday shopping in 2020 and found four trends that you should know about. From rethinking the holiday shopping timeline to reimagining traditional shopping events, retailers are starting now to make plans to ensure they’re ready to meet consumer holiday shopping needs. Here's what we found.
1. A much longer holiday shopping season. NRF surveyed 54 retailers to see how they’re planning for 2020 holiday shopping, and 74% said they believe consumers will spread out their holiday shopping over several months. In fact, almost half expect consumers to start their holiday shopping in October this year.
“Everything has changed, and retailers are having to reinvent themselves,” said Marie Driscoll, Head of U.S. Research at Coresight Research. “The deals will start in October, and retailers will re-up week after week — they’ll have one limited edition on week one, and week two it’ll be something else so they can get consumers to keep buying.”
2. An increase in online shopping. More consumers plan to shop on Cyber Monday than on Black Friday according to the BlackFriday.com survey we previously referenced (30% vs. 24%, respectively), which means they’ll be skipping the typical, crowded, in-store Black Friday experience this year. In last year's survey, consumers said Black Friday was their top shopping day. Confirming this trend is UPS’s plan to step up hiring for an expected increase in package volume to start in October and continue through January due to increased online holiday purchasing. "We're preparing for a record peak holiday season," said Charlene Thomas, Chief Human Resources Officer at UPS. "The COVID-19 pandemic has made our services more important than ever."
3. It's back to basic for gifts. After years of buying “experience” gifts like travel, concerts and entertainment, experts say they expect consumers to return to gift-giving basics. Families aren’t going to Disney World or even the local theatre this year, so experts predict they’ll use that money for toys and electronics to be used at home.
“In the past couple of years, we’ve seen a shift to gifting experiences: sporting events, trips, concerts,” said Natalie Kotlyar, Retail and Consumer Products National Leader at consulting firm BDO. “This year we’re going to be moving away from that, back to more traditional gifts like electronics and toys.”
4. Reimagined shopping experiences, like curbside pick-up, outdoor markets, and parking lot pop-ups, will continue and/or increase. According to Ipsos retail tracking, 53% of shoppers said they’ll choose to holiday shop at stores that offer contact-less shopping, and 47% said they’ll use options to buy online and pickup in-store (BOPIS) or use curbside pickup. eMarketer predicts that growth in U.S. click-and-collect (order ahead/curbside pick-up) online sales will increase 60.4% this holiday season. And retailers looking for ways to duplicate the in-store experience but in lower-risk settings may try setting up pop-up shops outdoors, similar to European-style outdoor holiday markets.
Whatever method you’ll use to attract holiday shoppers to your store this year, be sure to start planning for it now. With shoppers expected to start their holiday shopping even before Halloween, the countdown has already begun.