Commentary: How retailers can weather the holiday storm
Retailers are racing into a truly unique holiday shopping season, capping off a year where questions were often easier to come by than answers. At RetailMeNot, we are in the business of providing answers, or solutions. And our answers come backed by data, so allow us to shed some light on how the season is likely to play out for both shoppers and retailers. Spoiler alert: It won’t be boring, and there is plenty of reason for optimism.
1. The Forecast
As with so many things in our lives right now, COVID-19 will significantly reshape this holiday shopping season. Below are three key ways this year will be different.
- The holiday season will start earlier and last longer than in previous years. In fact, it’s already begun.
- People will do more of their shopping online than ever before.
- Despite economic uncertainties, people will still shop and actively seek deals. Some will even spend more than ever. #Optimism.
2. The Retailer’s Role
How should retailers be recalibrating their plans in order to meet this remarkable moment? I have a few ideas.
Make the in-store experience safe, enticing and fun. It’s been a rough year for most people, and shopping has taken on an air of anxiety for many. Anything your brand can do to bring joy to the exhausted masses will set you apart and make you a magnet for new customers.
Connect the online and offline experience. The online shopping experience you deliver will be a huge predictor of your success this holiday season. Recent RetailMeNot data suggests that 75% of shoppers prefer to shop online this year, with 18% planning to shop online only this holiday. Having said that, the in-store experience remains important.
The retailers that fare best this season will be those that connect the two — offering payment options through the app, delivering relevant, location-based messaging to consumers in store, correctly indicating in-stock merchandise online so consumers aren’t disappointed when they arrive in store, promoting social experiences while in store, etc.
Cast a wide net with marketing and promotions. Be prepared to start holiday promotions early and offer competitive pricing in order to capture early sales. You can't be sure what situation your typical priority audience might be in, so expand your media targeting to reach new audiences and demographics and grow your base.
3. The Shopper’s Mindset
Enough about retailers, and more on what this holiday shopping season looks like for shoppers. First, it seems that people are happy to shop early this year. In our survey, 75% of shoppers say they prefer to complete all their holiday shopping as early as possible, while 39% say they will get an early start specifically to avoid potential shipping delays or inventory issues.
The impact of COVID-19 on the in-store shopping experience is clear, too: 46% say they will try to complete their shopping in fewer trips than usual, while 52% plan to visit stores during off-hours to avoid the crowds.
It’s impossible to overstate the economic hardships many people have faced in 2020, so it may come as a relief to retailers that 66% of the shoppers we surveyed say they plan to spend the same total amount—or more—on the holidays this year.
As for what people are likely to be perusing most, our survey says the top three are electronics (61%), clothing/accessories (52%) and shoes (33%).
4. Trend Watch
What holiday trends can retailers and consumers expect to see this year? Deals look to be more important than ever. Three findings from our survey support this notion:
- 80% of respondents say they will take action to save money on their holiday shopping this year.
- 71% say price will be the biggest determining factor in the gifts they purchase for the holiday season.
- 64% of the people say they will continue to research deals or discounts before purchasing gifts during the holiday season.
Another possible trend you’re likely to see: shifts in brand loyalties. A disruptive year has made consumers reconsider their feelings about some brands and a whopping 35% of shoppers we surveyed say they are in the mood to try new stores or brands this year.
We mentioned customer concerns about product delays. No wonder then that the retailers we surveyed are placing a similar emphasis on fulfillment and shipping. 46% say they plan to spend more than ever on preparation, while 51% say they will be encouraging shoppers to complete holiday purchases as early as possible to avoid shipping issues.
Curbside pickup, a new staple of the COVID-19 era, will continue to grow in importance. 52% of retailers say they plan to deploy it for holiday shoppers this year. Smart move—the best brands change with the times and with their customers.
5. Marketing and Promotions
As we look to the remaining weeks of 2020, one thing is certain: Marketing and promotions remain critically important to brands desperate to end a tumultuous year on a high. In our survey, 86% of retailers report that deals or discounts are the only way their organization is able to stay competitive at the end of the year.
Black Friday and Cyber Monday will still be significant, but our data shows a drop in the number of people likely to be shopping in-store over that weekend. 88% of the people we surveyed say they do not plan to shop traditional in-store doorbuster deals.
Should retailers go all in on mega sales events? If Amazon Prime Day 2020 is any indicator, the answer is a resounding yes. In addition to the massive, early reported sales numbers, RetailMeNot observed over 350 retailers promoting alongside Prime Day this year, which is up 17% compared to last year’s retail event.
Another such opportunity is coming up Nov. 5-6. It’s RetailMeNot’s own Cash Back Day. A 48-hour event this year, Cash Back Day brings savings of up to 20% off from more than 300 different retailers. It will also now feature limited-time flash offers and stacked cash back, giving shoppers the ability to stack cash back offers on product-specific deals. Brands already on board for this year include Adidas, Postmates, Macy’s and many more. People shop, purchase and then sit back as RetailMeNot puts cash back into their wallet. In last year’s single-day event, shoppers earned an average of $19 per order, and RetailMeNot paid out more than $450,000 to customers.
As rocky as this year has been for so many retailers and consumers alike, we feel a distinct note of optimism in the air as the holiday season gets rolling. And, lest we sound like we’re trying to wish that optimism into reality, a little data to back it up: 86% of the retailers we surveyed say their organization is forecasting an increase in holiday sales this year vs. last. Focus on your strengths, keep listening to your customers, and your brand can tap into the many opportunities that exist. Here’s to finishing the year strong.
By Lauren Cooley, senior VP of retail and brand solutions for RetailMeNot.