Gift givers may come out and be ready and ripe for purchasing. We will also have to wait and see if summer brings out the best in buyers and pushes them to spend as shelter-at-home orders are lifted.

As retailers find themselves mired in the coronavirus, their reality is often based on the sectors they sell in, whether they are virtual or store-based, along with the liquidity of their business. No matter the circumstances, this is the time of year when retailers start to think about their holiday plans and how to prepare for what promises to be an unprecedented holiday season. I wanted to focus on six topics that are certain to be in the forefront of any discussion around the holiday season.

Before we get to the nitty gritty, let’s take a quick look at the numbers during three key holidays as a starting point.

  1. Amazon Prime Day: Digital Commerce 360 estimated 2019 Prime Day sales hit $7.16 billion globally. From a 2020 perspective, Prime Day was initially slated for July 15-16, although it likely won’t take place until August and could run as long as a week given the volume it hopes to achieve. 89% of those surveyed in Digital Commerce 360’s 2019 Prime Day survey were familiar with the holiday and 44% actually made a purchase. Shoppers were evenly split between being item-driven and just browsing for the best deals. Computers and electronics topped the list of categories purchased (41%), while 29% bought apparel/accessories and 23% hardware and home goods.
  2. Back to school: Last year’s initial projections saw back-to-school sales expected to reach $80.7 billion, according to the National Retail Federation. Like many things, the season ahead finds itself in an unusual position. It is unclear how many students will physically return to school. Everything from basic school supplies to dorm room setups may be on hold if the dates are widely postponed. For many of us, it feels like a holding pattern and this may delay our spending.
  3. The holidays: Despite record-breaking online sales during the 5-day shopping period from Thanksgiving through Cyber Monday, the holidays failed to reach the heights some retailers had projected. Ultimately, U.S. shoppers spent $138.65 billion online last holiday season, up 13.6% from the prior year, according to Digital Commerce 360 estimates.

Digital Commerce 360’s April coronavirus survey of 107 retailers reinforces the uncertainty that lies ahead. Its impact on one’s ecommerce performance numbers shows mixed results and will serve as a starting point for the industry as a whole.

Q1. Which customer will show up?

It’s hard to predict which customer will show up this holiday season. One can’t help but think holiday shopper behavior will be a case of the haves and have-nots. For those that are working and whose families are in a strong financial position, perhaps it will be business as usual. They just might find themselves making up for lost time and could be very aggressive in their spending patterns. They may not have made any significant apparel purchases for months and are anxious to step out. At the same time, I see another type of shopper who tapers off her purchasing to reflect the more sober times. Now more than ever, an overarching shopping approach to the holidays may be the pursuit of promotions. Retailers are in a make-or-break situation that may push them to promote early and often.

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Gift givers may come out of the closet and be ready and ripe for purchasing. Right now, it’s not hard to imagine as there’s certainly pent up demand. We will also have to wait and see if summer brings out the best in buyers and pushes them to spend as shelter-at-home orders are lifted. Lastly, it will also be interesting to watch if the replenishment shopper is still in full force as a result of shopping habits that were engrained during coronavirus. One can’t help but wonder if they will be looking for deals as they continue to stock up for the months ahead.

Q2. Will retail sales be concentrated among a handful of retailers?

With so many retailers on the cusp of survival, one of my biggest fears is whether purchasing will become even more concentrated than it has in the past. Both the robustness of assortments, marketing budgets and the logistics to deliver swiftly all will matter as we move closer to the holidays. Investments must be forthcoming and not all retailers will be in a fiscal position to make that happen. Others will be poised to profit from this, with Amazon at the top of this heap. One counterbalancing factor may be the interest in shopping local to ensure business survival as was cited by 38% of online shoppers in Digital Commerce 360/Bizrate Insights’ April coronavirus survey of 1064 online shoppers.

A look back at last year’s back-to-school study may be worth mentioning as “The Big 3” received the lion’s share of consumer purchasing. The survey findings revealed the following purchase penetration: Amazon (55%), Walmart (47%) and Target (45%). These retailers are in a position to keep investing coming off the coronavirus.


Lastly, our post-holiday Digital Commerce 360 2020 survey suggested that 30% of those surveyed already concentrate their shopping on a handful of retailers, reinforcing these likely patterns.

Q3. Will in-stock be of concern over the holidays? 

One of the biggest challenges during the coronavirus has been product availability. 47% of online shoppers experienced both out-of-stocks and shipping delays. One would have to believe that retailers will strive to return to the expedited delivery that was standard prior to the pandemic. Waiting for shipments during the holiday season faces a much different set of personal circumstances and may be riskier.

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As inventory represents one of the larger balance sheet items, deciding how much inventory to stock will be a challenge. Every retailer must evaluate whether to take a lean and mean approach, balancing their ability to get back into hot products against the carrying cost of excess inventory. We need to distinguish between essential products that were in favor during the coronavirus and those that faced a tougher road, including categories like apparel and luxury goods. The success of the upcoming seasons may ride on these decisions.


 Q4. How will retailers alter their fulfillment strategies?

Even before COVID-19, the other way that shoppers hoped retailers would do better in 2020 was faster deliveries. 39% of survey respondents indicated that this would propel them to buy even more. They will quickly forget the long delays of the coronavirus and replace their sentiments with past preferences.


Q5. Will all products be on promotion?

I ask myself about product prices and how willing the average shopper will be to pay full price. My sense is that retailers will find themselves in a make-or-break situation that may push them to promote early and often.

The questions will likely play out as follows: Will shoppers wait for sales or will sale pricing just be the norm during this holiday season in hopes of keeping the dollars flowing? If I was a betting woman, I would assume that sales will be widely available and the markdowns steep.

In January 2020, Digital Commerce 360 and Bizrate Insights surveyed online shoppers to understand the ways in which their shopping behavior had changed from the prior year. Price rose to the top of the list as 42% indicated they purchase from the website with the lowest cost.

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No discussion of price would be complete without touching on free shipping. When 989 online shoppers were asked in March 2020 about the percent of their orders that included free shipping (beyond Amazon), 70% suggested that more than half of their non-Amazon orders included this perk.

Lastly, looking back at our 2019 back-to-school survey, free shipping was also prevalent, with 70% taking advantage of this consumer favorite. (Bizrate Insights Free Shipping survey of 989 online shoppers)

Q6. How important will omnichannel be?

Given the increased adoption of omnichannel during COVID-19, one can only project that shoppers are now converts and will expect that these store-based services will continue. In particular, curbside pickup played an emerging role and expectations among shoppers may be that this option will now be available at the myriad of retailers that tested it during the pandemic.

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Digital Commerce 360 and Bizrate Insights’ omnichannel survey of 1,000 online shoppers in February 2020 revealed that 41% had ordered online and picked up product at the store. Curbside numbers were much lower at 13%. Certainly, they have risen during the coronavirus, and their potential will be a factor of retailers who continue to extend their omnichannel capabilities into the future.

In my estimation, it will likely be more of a middle ground as some extend and others retreat, preferring that shoppers come into the store to peruse the assortment.

Reflections     

Although I’ve attempted to look ahead, the unknown continues to surface. At Digital Commerce 360, we will monitor the sentiments of shoppers and gather the perspective of retailers as the holidays get ever closer. At that point, we will know more about which shoppers will show up and the retailers that are likely to capture their attention. We have seen how sellers are stocking the shelves and continually finding alternatives to deliver the goods via omnichannel options. Every day seems to produce a new chapter in what’s possible, and we await the innovation that retailers will put forth.

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