Article

Holiday 2020: 3 trends for retailers this season

By Erin Hueffner

Published October 20, 2020
Last updated October 20, 2020

The most wonderful time of the year will look a bit different in 2020. The holidays are usually a time for parties with family and friends, wearing ugly sweaters, going to see The Nutcracker or taking beach vacations over the winter break. But with the pandemic still gripping the world, even Santa may have to practice social distancing. Traffic in brick-and-mortar stores is sure to be down, and economic uncertainty may mean reduced consumer spending. It’s also an election year, which creates more media and social noise for retailers to cut through.

What’s not uncertain is that the holiday season, typically November and December, is an important time for retailers. Sales can make up as much as 30 percent of a retailer’s annual revenue. Some retail sectors have already been hit hard by the pandemic while others have fared well, but nearly all now face the task of figuring out how best to connect with customers and work outside standard staffing and inventory formulas.

“I do think it’s going to be a holiday season unlike any holiday season we’ve seen before given social distancing and masks and everything else,” Chip Bergh, chief executive of Levi Strauss & Company, said in an interview with the New York Times. “There’s the combination of pandemic, which won’t be gone by this Christmas, and the economic fallout from it, which, who knows how bad it’s going to be by then?”

Some retail sectors have already been hit hard by the pandemic while others have fared well, but nearly all now face the task of figuring out how best to connect with customers and work outside standard staffing and inventory formulas.

Early holiday spending forecasts don’t sound promising: according to Brandwatch, 44 percent of consumers say they plan to spend less on gifts and holiday celebrations in 2020 compared to last year. At the same time, a July 2020 report from Forrester, “The state of the U.S. shopper — COVID-19,” stated that “Fully 84 percent of U.S. online adults are buying the same amount or more online because of COVID-19.”

What this means is that it may be a tale of two customers—those who are needfully scaling back, and others who are saving money in areas like travel and dining and shifting their funds in new directions, towards things like home improvements or personal luxury items. For many retailers, the key to success may be how well they understand why people are purchasing the things that they are.

Based on emerging forecasts and recent research, here are three things that retailers need to be focused on this holiday season.

[Related read: 5 trends from retail’s 2020 Big Show]

1. Boost the e-commerce experience

The way people shop has changed over the course of the pandemic. Many Americans have moved online in hopes of avoiding crowds in stores, and retailers should encourage people to continue shopping online. Part of this is about giving customers more advance notice of sales or expanding promotion timelines beyond traditional sales periods like Black Friday, Cyber Monday, and Amazon Prime Day. The more flexibility customers have, the more they can buy when it works for them. The National Retail Federation’s (NRF) 2020 forecast reports that in a survey of 54 retailers, 74 percent believe the holiday season will be longer this year as customers spread out their purchases, and that holiday shopping will begin in October.

The best way to meet customer needs is to make sure the e-commerce experience is easy and seamless from purchase to after-sales support. Retailers will also need to be nimble and able to manage the supply chain so that inventory can be found, easily moved, and shipped to customers—whether that’s from a warehouse or an individual store.

For many retailers, the key to success may be how well they understand why people are purchasing the things that they are.

Consumer patterns continue to evolve regardless of the pandemic. "Forty percent of U.S. online adults prioritize convenience and opt for products that reduce effort while enhancing speed and ease," according to Forrester analysts in an August 2020 report: “Vast, Fast, And Relentless: Consumer Buying Enters A New Era.

The report went on to explain: "...But as buying options have evolved, consumers no longer need to trade off price, convenience, and emotional experience. Innovative new products, services, and delivery models now cater to all three at once. This has triggered five changes in consumer attitudes: Consumers are more willing to test new brands and products; rely on personal devices when transacting; expect seamless digital and physical experiences; are savvy when gathering information; and are motivated to seek out the best buying experience."

[Related read: Reimagining the future of retail]

2. Focus on customer service

A spike in online orders comes with new challenges, like managing—and accounting or apologizing for—out of stock items and shipping delays. This is where customer service is key and proactive communication can go a long way.

As much as retailers can automate or make self-service available, so that customers can easily know or find out what’s happening with their order or return, will help them keep call center volume manageable. This requires having the right processes and data in place at the right time, and, ideally, the ability to provide real-time answers. If, for example, a customer reaches out to a centralized call center, will the support agent know the status of the customer’s curbside pickup at an individual store?

"Consumers are more willing to test new brands and products; rely on personal devices when transacting; expect seamless digital and physical experiences; are savvy when gathering information; and are motivated to seek out the best buying experience." — Forrester

Some retailers may also want to think creatively about repurposing sales associates to connect with customers virtually or by phone. Ultimately, customer retention may be about a retailer’s ability to be there and listen, and to apologize when things don’t go right.

[Related read: D2C retail: Why a simple customer experience is just what we need right now]

3. Offer curbside pickup

Although nearly two-thirds of retailers surveyed by the NRF expect all of their stores to be open in October, November, and December, the pandemic makes it not only unlikely, but impossible, to pack stores in the same way as years past. So while ordering online for pickup in a store isn’t a new phenomenon, it’s become far more important for both customers and retailers. According to the NRF, many retailers were able to quickly stand up this service early in 2020. Michaels craft store began offering curbside pickup for the first time, almost from the beginning of the pandemic, while other major retailers like Kohl’s expanded existing, but smaller programs.

For shoppers, curbside pickup offers convenience and safety. It also gives retailers another way to make sales and reduce the number of people in-store. For retailers that moved quickly on curbside pickup, or are offering it for the first time, heavier holiday volume may pressure-test a store’s capabilities on whether the staffing and inventory flow can meet customer expectations.

Ultimately, customer retention may be about a retailer's ability to be there and listen, and to apologize when things don't go right.

Agility is required

Research tells us that good good customer experiences can create loyalty—and a bad customer experience can easily drive shoppers to a competitor. With heightened anxiety and the weirdness of a socially distanced holiday season, the pressure to get the customer experience right is as heavy as ever.

It may be a time for making seismic in the way things work—for both the short- and long-term. And when it comes to creative solutions like curbside pickup, consider that Santa, after all, has been making chimney-side deliveries before it was cool.