Retailers have reason for cautious optimism this holiday season: shoppers are expected to spend an average of $997.79 on gifts, holiday items and additional “non-gift” purchases, according to data from the National Retail Federation and Prosper Insights & Analytics. While this figure is down $50 from 2019, given 2020’s overall uncertainty, such a slight decline would represent a significant victory.
Ecommerce in particular is set to continue the massive growth trajectory it’s achieved all year. Adobe expects online holiday spend to surpass $189 billion, up 33% year-over-year, compared to a 1% to 1.5% increase for retail overall. Total ecommerce spend could reach as high as $200 billion via a combination of government stimulus and further physical store closures.
This challenging holiday season can become an opportunity for retailers that understand what shoppers are expecting and rise to the occasion. Some of this year’s most relevant projections include:
- Social distancing will jack up deliveries: People want to give their loved ones gifts even if they’re not celebrating the holidays together, and many will do so by having presents shipped directly from the retailer to the recipient — adding volume pressures to the last mile;
- Social media is key to making a splash: Retailers must engage with customers via multiple touch points, particularly social media, to stand out in the crowded holiday ecommerce space;
- Retailers will look for ways to save on last mile: Tight transportation supply will make last mile expensive, but an emphasis on digital items like gift cards, along with encouraging curbside pickup on major shopping holidays, can help keep costs under control; and
- Stressed shoppers want a sense of safety: Picking up an item in-store both saves money for retailers and ensures timely arrival for shoppers, but retailers need to let their customers know safety is top of mind if they want to draw them back to physical locations.
Delivery Delay Woes Can be Handled with Transparency and Honesty
The pandemic’s impact on shopping habits isn’t abating: 66% of respondents will prefer home delivery over other fulfillment methods, according to a survey by Oracle. Adding to the overall shipping volume will be those consumers who would normally have purchased a gift in-store and brought it to the recipient themselves. With travel restricted by COVID-19, these shoppers are highly likely to choose shipping directly to the gift recipient.
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“People will be staying at home and having a much more isolated Christmas,” said Peter Sheldon, Senior Director, Commerce Strategy at Adobe in an interview with Retail TouchPoints. “Gift purchasing is still as important as ever, but regardless of whether I buy it online or in a store I can’t physically take that gift with me to my family because I’m not traveling to see them. The only way they can get that gift is for me to send it, and it’s going to be way more convenient for me to just go online, buy the gift and tell the retailer to ship it to the recipient than it is to go to a store, buy it, bring it home, package it and take it down to the post office.”
Adobe also found that 64% of consumers won’t pay for fast shipping, meaning retailers need to encourage shoppers to make their purchases with plenty of time to spare. Retailers’ most useful tools here are transparency and honesty. Letting shoppers know why and how shipping times are being lengthened can create a sense of urgency, pushing more sales earlier into the season. Early-season sales not only make on-time deliveries more likely; they also help retailers’ bottom lines.
“Let shoppers know that the pressure is rising because everybody is looking for the same delivery mechanism to get it shipped to home. If they really want to be sure that they’ll receive the gift in time for Christmas, Hanukkah or whatever they’re celebrating, they need ample time for shipping,” said Rose Spicer, Global Senior Director of Oracle Retail Marketing at Oracle in an interview with Retail TouchPoints. “Educate them and let people know that it’s important to place their order as quickly as possible.”
Transparency shouldn’t end when a shopper makes a purchase: 73% of consumers said real-time updates on item location throughout the delivery process are important, according to Oracle.
Social and Mobile Should be Top of Mind to Win Ecommerce
It’s no surprise that ecommerce will continue to dominate overall purchases. A survey by Accenture found that 75% of consumers say they’ll do at least some of their holiday shopping online, up from 65% in 2019, while 43% plan to shop online exclusively. In a space with near-infinite choices, retailers will need to find a way to stand out from the competition in order to get a share of this expanded “pie.”
One key is leveraging social media to its fullest. Retailers should put their brand purpose front and center as they make themselves visible in online communities and conversations, offering content that goes beyond traditional shopping messages. Retailers also can take advantage of the increasing integration of social media and shopping platforms, which let shoppers make purchases as they scroll their favorite social networks.
“With so much clutter around online shopping, brands will have to differentiate themselves through messaging and experiences that stand for something people care about,” said Rori Duboff, Managing Director of Strategy and Innovation at Accenture Interactive in an interview with Retail TouchPoints. “To reach the heightened numbers of online shoppers, retailers should consider embedding shopping into social experiences. For example, Instagram does a great job of this with retail brands — ranging from Gap and Allbirds (with AR activation) to Nordstrom and smaller boutique brands.”
Retailers also should keep in mind what devices shoppers are using to browse. Adobe projects that 42% of shopping will be done from smartphones this holiday season, and smartphone shopping dollars will grow by 55% year-over-year. That means mobile experiences need to be as close to perfect as possible, whether enabling purchases through a social media app or redirecting shoppers to a retailer’s own website.
Curbside Helps with Last Mile, but Requires its Own Preparations
While ship-to-home may be the preferred delivery method for most shoppers, 18% will utilize buy online, pick up in-store (BOPIS), and 16% will buy online and pick up curbside, according to Oracle. Adobe believes these fulfillment methods will be most prevalent on major shopping days like Black Friday, when shoppers are 9% more likely to buy from retailers offering BOPIS or curbside pickup.
Retailers should already be preparing for these significant traffic upticks, according to Sheldon. BOPIS is a great way to defray some last mile costs and ensure shoppers receive their gifts in time, but providing a good experience is paramount. Extra staffing, proper training and plenty of practice all will be essential to ensuring things run as smoothly as possible on peak days.
“There are all kinds of challenges,” said Sheldon. “Have we got enough parking spots reserved specifically for curbside pickup? Do we have enough staff that can actually do the pick-and-pack, so that consumers are getting notifications that their items are ready for collection in the right window? This is retailers’ number-one job, and they are putting a huge amount of focus around making sure operationally that they’re ready for this rush in in a couple of weeks’ time.”
Digital presents also can save on shipping costs, while helping gift recipients avoid pesky returns. With people looking for as smooth an experience as possible, it comes as no surprise that 27% of shoppers cited gift cards as their top present for this holiday season, according to Oracle.
To Lure Shoppers Back to Stores, Communicate a Sense of Safety
Getting shoppers into stores for the holidays is a tall order, but it’s not insurmountable: 18% of shoppers felt safest in an indoor mall, 24% in outdoor shopping venues and 58% are fine with either, provided they follow the proper safety precautions, according to Oracle. Ensuring a sense of safety will be essential to curbing last mile costs with BOPIS and other in-store offerings. Consumers have identified key safety best practices:
- 79% of shoppers said it’s important to see staff and other customers wearing masks;
- 82% said it was important to see visible cleaning efforts;
- 66% of shoppers noted the importance of contactless checkout;
- 76% noted reduced occupancy levels in stores as key; and
- 39% of shoppers said a lack of social distancing would cause them to have a bad shopping experience.
Once a retailer puts these precautions into practice, the next step is to properly communicate them in order to draw customers into the store, according to Spicer. Email is a traditional way to get in front of shoppers, but social media sites from TikTok to Facebook are well-suited for demonstrating efforts in video or image form. Communicating about workers’ safety also is important: 61% of shoppers say they plan to minimize in-store shopping to reduce health risks to essential workers, according to Accenture.
“Communication can always be part of the offer, to say, ‘You’re safe with us,’” said Spicer. “There’s something compelling in a message like that. It gives people that confidence that you can be trusted to have their best interests at heart.”
