The beginning of 2020 didn't seem too optimistic due to the upheaval of COVID-19. That's why lots of businesses are looking forward to the holiday season at the end of the year.
Although the pandemic is not over, there's no sign that worldwide shoppers will cancel the tradition of Black Friday and Thanksgiving shopping. Instead, many predict that this year’s cyber weeks will be crazier than ever.
In this article, we will go through some of the changes in customer behavior in the New Normal and how major retailers are responding to this.
To succeed in this year’s holiday sales, retailers have to modify their plan to meet the expectations of customers in the New Normal. In this regard, changes in shopping behavior should be taken into careful consideration.
The Aftermath of the COVID-19 Outbreak
What it’s taken from us
The storm of the global pandemic has swept over and left a lot of damage to the world economy.
Insights from CBRE reveals that total U.S retail sales dropped 8.1% YoY in Q2 2020. This is the most significant decline since Q2 2009. For the first time within five consecutive years until now that the U.S has experienced a fall in retail sales.
This can be attributed to the increase in the unemployment rate, which leads to a sharp decrease in spendings. According to a survey of more than 30,000 Americans:
- 71% have cut back on their spending to prepare for a recession or pay loss
- 43% plan to limit purchasing to essential items this year
- 54% expect their holiday shopping patterns to be affected
McKinsey forecast that it is not until Q2 2024 that personal disposable income in the US is expected to recover to the pre-crisis level.
Some hidden opportunities
Although the retail business overall has been suffering since the COVID-19 pandemic, parts of the industry still signal growth. eMarketer expects a recovery of retail sales from the end of 2020 thanks to holiday shopping. By the beginning of 2021, it is expected to surge again.
In Q2 2020, total retail sales in the US dropped 24%, but at the same time, eCommerce sales growth hit a peak of 23%.
As worldwide consumers have to be more careful with their expenses, they are more eager for door-busters and discounts. Bazaarvoice polled over 5,000 consumers in North America and Europe and found out that 49% are shopping online more frequently than they were pre-COVID.
Also, eCommerce businesses are gaining more attention than ever before. Even when retail stores reopen, 75% of Americans expect to continue their online shopping habit. With the holiday closure announcement of big retailers, FluentPulse predicts a 73% increase in those who shop exclusively online.
Change in Consumer Shopping Behavior
We are facing tremendous changes during COVID-19 and in the post-pandemic period. Shopping routines, expectations, and purchasing behaviors have been fundamentally altered because of the social distancing orders and the “New Normal" guidelines.
More Online Shopping and More Expectations
Customers have turned to online shopping as a result of shelter-in-place orders during the COVID-19 outbreak. They seem to have gotten used to it even after brick-and-mortar stores have reopened. According to Bloomreach, 50% of buyers are shopping for products they've never bought online before on digital channels. 54% rank online marketplaces as their No.1 shopping channel.
Online shopping becomes a new habit during country lockdowns and social distancing periods. Now that brick-and-mortar stores are operating as normal, customers are still shopping online.
Shoppers are also paying more attention to what they’re buying online and how they are served. In an in-depth analysis of Commerce Experience by Forrester, 80% of online shoppers who abandoned their purchases did so due to difficult online experiences. Moreover, 53% of customers will not buy from the same business again after a negative experience. The top reasons for bad online shopping experience are:
- Difficult search and navigation
- Lack of product information
- Late delivery and no option for pickup
- Lack of payment options
More Engagement with Local Brands
The latest report of Rakuten predicts that 51% of holiday shopping will be from local stores as a result of purchasing habits developed over regional lockdowns. Also, 36% will choose click and collect options where available.
In a report about consumers’ habits, Accenture points out that more than 75% of consumers are buying from neighborhood stores or consuming more locally sourced products and more than 80% of them expect to keep this behavior up into the longer term.
High shipping fees with possible delays due to border closures add to the importance of product availability in the neighborhood.
Consumers turn to locally sourced products to strengthen the community and ensure product availability.
Customers also prefer nearby store locations where they can come and pick up stuff. Google searches for “curbside pickup” and “home delivery” in the U.S. almost doubled in March and nearly 60% of Australian buyers have looked for “what’s open near me” online.
More Attention to Health and Sustainable Values
To maintain well-being amidst the pandemic, consumers have been more cautious of health and sustainability.
Health concerns have become a big issue as 64% of people are worried about their wellness and even a larger percentage are fearful of other people's health. It makes sense that consumers are actively looking for use of masks and physical barriers when deciding where to shop in-store.
Protection measures like the use of masks and the availability of hand sanitizers help to gain customers' trust and loyalty in brick and mortar stores.
Discretionary shopping is on hold while 70% of customers are purchasing more necessities than usual. Data from Accenture showed that 61% of consumers were making more environmentally friendly, sustainable, or ethical purchases during May and June 2020. Among those, 89% said they are likely to continue green habits post-pandemic.
What Big Retailers are preparing for BFCM
“As we move into the holiday season of this very unusual year, we are adapting our plans in response to changing customer expectations and behaviors" - Michelle D. Gass, CEO of Kohl's
Due to major changes in shopper behavior, retailers have altered their holiday strategies accordingly. Here are there 5 major shifts we have seen in the retailing world in preparation for holiday shopping in the New Normal.
The focus will be shifted to the online experience
While customers are still hesitant about shopping in-store, retailers are shifting more resources to better their online shopping sites.
Dedicated Support for Online Shoppers
While closing the physical locations, Walmart will keep its fulfillment centers open to handle online orders on Thanksgiving. This makes sure shoppers will get their purchased items on time.
On the other hand, Home Depot is refocusing its mobile app to help shoppers be as prepared as possible for upcoming sale events. For the first time, this retail giant is rolling out new features that allow app users to access early deals before they go live online.
Macy's 100-year-old tradition of the Thanksgiving Day Parade will be viewable via TV/streaming only and in-person attendance won't be permitted.
Virtual Try-Ons are on the rise
Zeekit, which supplies AR to brands such as Adidas and Tommy Hilfiger, is perfecting the See My Fit technology for ASOS. The advanced virtual fitting room allows customers to see what an outfit looks like on six real-life models. After completiopn, it promises to enable shoppers to drag hundreds of pants, tops, and coats onto photos of themselves.
Yael Vizel, CEO at Zeekit, said: “Digital dress-up brings to life the powerful capabilities of generating beautiful fashion content with the click of a button, on any real-life model or customer – without leaving home.”
With Virtual Try-On, MAC Cosmetics will bring more than 200 products to the home of customers. Jewelry brand, Kendra Scott has launched an AR driven tool that allows shoppers to “try on” earrings using their Iphone browsers.
Kendra Scott announced the new feature on Facebook.
BONUS: How to optimize shoppers’ online experience
A 1-second delay can cause a 7% reduction in conversions, according to insight from Hubspot's study. So, how can you save customers that little 1 second?\
Let's begin with high-performance web hosting. While your web traffic is low, shared hosting can work pretty well. However, enterprises should think of more high-class options like a dedicated server to handle traffic spikes.
At Boost, we choose Premium Amazon Web Services. It is flexible to scale up and down with bandwidth. Also, AWS offers a Content Distribution Network (CDN). This global network of servers routes the users’ requests to the closest server in the network to decrease load time.
Online visual merchandising
The product position on collection pages and search result pages matters as much as product arrangement in traditional brick-and-mortar shops. You can put new items, sales items, or hot-sellers in the first line of the product listing to capture shoppers’ attention.
One of the biggest challenges of online shopping is customers can’t see and feel the products. That's why retailers must give them as many visual materials as possible.
Besides images, many eCommerce sites are using videos to promote products.
A great example of videos in product pages on Reddress Boutique (Source: Reddress Boutique)
Text-based and image search suggestions on an instant search widget are helpful to give customers a preview of your products.
Read on 6 Merchandising and Promotion Hacks Top eCommerce Sites Are Using
Navigation and Site search
As mentioned above, difficult search and navigation are among the top reasons for negative online shopping experiences. This is no surprise because up to 30% of online shoppers land on the search bar when browsing an e-store.
We have an elaborate article about How to Optimize Your Conversion Rate with Navigation & Site Search. Check it out for more execution tips.
Below are a few to-dos for your navigation and site search:
- Make the search bar visible and user-friendly
- Enhance search functionality with auto-complete
- Guide shoppers better with search suggestions
- Optimize error corrections
- Allow other search angles, not just product names
- Provide searchers with abundant filtering options
- Provide synonym results
- Use analytics data to improve your eCommerce site search
One last obstacle on the customer journey is a complicated check-out. Disruptive and irrelevant pop-ups, too many fields to fill in, and mandatory log-in can make the shoppers think twice.
Still, it will do more harm than good if you loosen check-out requirements. Frauds can always happen. So, our suggestion is that you make it easier and quicker for customers to get all the compulsory lines checked.
Enable predictive suggestions for shoppers' addresses or simply embed an online map so they can drop a pin.
Also, think out of the box when it comes to payment gateways. In addition to conventional trusted financial services such as VISA, Mastercard, Paypal, integration with e-wallets like Apple Pay and Samsung Pay can improve the check-out process.
More than 50% of internet traffic shopping comes from a mobile device, so website owners should pay as much attention to mobile users as to desktop browsers.
Having a shopping app is an ideal choice to cater to customers with smartphones. While this option can take time and resources, Progressive Web Apps (PWA) is a revolution for a user-friendly mobile experience.
This is the solution for one design to fit all devices, whether desktop, mobile, or tablet. PWA enables shoppers to have a uniformed shopping experience online, reducing the time for adjusting to different interfaces on different platforms.
Deals will run longer and earlier
To make up for the closure on Thanksgiving, top retailers will be offering deals throughout the holiday season - and earlier than usual.
Retail giant Target said it's "stretching out the savings" starting in October for safety and to give shoppers flexibility. They encourage customers to join the free Target Circle loyalty program. By doing so, updates on deals throughout the season will get to you sooner.
The hardware giant, Home Depot, announced its Black Friday prices will be available throughout the entire holiday season, preventing the need to swarm on an actual day after Thanksgiving. They will instead be holding Black Friday savings and discounts starting in early November and going through all of December.
According to Tamebay, a publication for Amazon Marketplace sellers, Amazon Black Friday 2020 deals start at the end of October. Early Black Friday deals are said to last three weeks, until Thursday, November 19. Moreover, Amazon postpones Amazon Prime Day until October 13 and 14. This means there will be crazy sales on Amazon from the middle of October until November.
During Prime Day and holiday season this year, Amazon will carry out a £75-million promotional program to support small businesses globally (Source: Tamebay).
Physical stores will remain closed on Thanksgiving
Stores are already back to normal operation, however, a large number of retailers will keep their brick-and-mortar locations closed during the Thanksgiving rush to avoid large numbers of people congregating together.
Walmart, Target, Dick’s Sporting Goods, and Kohl’s, as well as Ulta, Home Depot, Best Buy, and Macy’s, have all recently announced store closures on Thanksgiving Day 2020. The closure will also extend to the Walmart-owned warehouse retailer The Sam's Club. This is the first time since the 1980s that Walmart will not open on Thanksgiving.
The list of major retailers closing on Thanksgiving is growing day by day (Source: USAToday)
The retail league is not yet to reveal their working hours after holiday leave, but it's likely that they will open for half a day from the afternoon.
Localization and delivery optimization
Because most people are shopping from home, delivery options must be flexible, and more importantly, on time to retain customers. A resilient and agile supply chain is necessary for retailers to survive and thrive during the pandemic.
Amazon and Walmart are adapting localization technology for their eCommerce sites. This allows web pages to responsively alter product offerings based on users' locations. Localization helps customers to find items from nearby suppliers, thereby, reducing shipping time.
Noticing a surge for social distancing while shopping, Best Buy has implemented curbside sales and pickup. The idea is to allow customers to remain in their cars while a Best Buy employee picks up and delivers their purchase to the curb.
Target has launched 1,000 spots for fresh and frozen grocery pickup in 47 states across the US and it aims to have 1,500 locations operational by the holidays.
Amazon is increasing the capacity for delivery and pick-up options for Amazon Fresh and Whole Foods Market. They have a separate time slot for the elderly and the disabled to come and pick up their products (Source: Amazon Blog)
Recently, the United States Postal Service (USPS) has announced a holiday surcharge on commercial packages. This is the very first time the USPS has imposed an additional fee for holiday delivery. The price increase can be up to $1.50 per package, applying from October 18th until December 27th.
For smaller merchants, it's a great idea to forge alliances with brick-and-mortar retailers to open pop-up stores or click-and-collect spots.
In the UK, the John Lewis Partnership, which operates department stores and supermarkets, has offered to provide both click-and-collect and returns services for other merchants. It's a great example of UK retailers avoiding holiday delivery surcharges. (Source: The Grocer)
Meaningful messages incorporated with promotion campaigns
Black Friday, Cyber Monday, Thanksgiving, and so on, are now associated with discounts and doorbuster deals. Still, that is not enough to set retailers up for success during holiday sales this year since every seller expects to cut their price to the bottom.
Retail giants are crafting a more strategic approach. They are sending out thoughtful messages for this special occasion of the year. IKEA has a video campaign called #YoMeQuedoEnCasa (#IStayHome). It reminds people of the stable world at home with casual activities like playing with kids, dancing, making music, or simply relaxing with loved ones. And of course, all around the house is furniture from IKEA.
In light of chaos, a touching and caring campaign is a best practice to survive the price war of holiday sales. Moreover, it will make you stand out in the competitive retail market.
A Few Last Words
Holiday sales season this year will see a lot of uncertainties due to the global pandemic. However, both sellers and buyers expect to enjoy holiday shopping. It will be the period to make amends for the time lost during lockdowns. So get your stores prepared by analyzing customer insights and watching out for what your competition is doing.
We wish you the best!