Retail Leaders Share Their Predictions for the 2020 Holiday Season

The 2020 holiday season is fast approaching, and it promises to be unlike any other we’ve ever experienced. If you’re like most retailers, your marketing team is heads down preparing for the busiest time of the year while also grappling with how to account for new challenges created by COVID-19.

To better understand what retailers expect to see this holiday season, we turned to industry leaders. Specifically, we surveyed executives at top brands and retail agencies, including Crocs, Hammacher Schlemmer, Indigo, Blue Moon Digital, Criteo, DEG, Hawke Media and Tinuiti. Here’s what we learned.

The Shift to Ecommerce Requires Thoughtful Strategy & Attention to Logistics

First and foremost, the retail leaders with whom we spoke predict that this holiday season will be extremely different than any other due to the accelerated shift to ecommerce that’s been underway since the spring.

Erik Huberman, CEO at Hawke Media, sees an important opportunity in this shift. He says: “Ecommerce has gone from 13% of consumer spending to 30% in the past couple of months. Even if we see a recovery (which is less and less likely) that number will not go back to 13%. Retailers will have to emphasize their digital strategy much more this year than in the past, as it has gone from an important part of their revenue mix to a necessary part of their revenue mix to sustain. If they do this well, there is an opportunity to grab more market share, as not everyone will adapt.” 

Meanwhile, Tim Rogers, SVP, CRM and Omnichannel at Criteo, points to the value of a hybrid approach that bridges the gap between in-store and online. “Preparing for uncertainty will be essential this year. Omnichannel retailers need an agile strategy that can quickly shift if circumstances change. Focusing on the in-real-life shopping options that help maintain social distancing (e.g. click and collect, curbside pickup, etc.) and/or doubling down on the ecommerce experience are essential aspects of any retailer’s holiday strategy to think through.”

Leading retailers are already making strides in this area, with many thinking through not just the experience aspect, but also the logistics of such a big shift to ecommerce in such a short period of time.

For example, Ann Marie Resnick, VP of Marketing at Hammacher Schlemmer, shares: “We believe holiday 2020 will continue to see less in-store shopping and even more online shopping than 2019. Our sense is that due to COVID-19, extended families will still not be traveling and most likely will not have as large holiday gatherings as in prior years. Buying may happen earlier, as we assume there will be an increase in ‘ship-to’ orders as well as in gift wrap orders. Inventory levels will need to be strong as holiday shoppers may not be as forgiving as they have been so far due to COVID-19 causing low stock levels as well as late shipments due to overwhelming activity levels (YoY) for FedEx, UPS and USPS. 

Projecting holiday sales levels will also be more difficult than ever before, as current trends vs. prior year holiday actuals may or may not be good indicators of what to expect in Q4 2020. It will be important to take a more ‘bullish’ approach to inventory levels (particularly for carryover products) so customers see you as a reliable brand to find what they are looking for and feel confident the brand will deliver on the promise and the expectations of both quality and delivery.”

Johnny Basto, Director of Marketing at Indigo, echoes this sentiment. He says: “Given COVID and potential retail capacity limitations (e.g. only a set number of customers allowed in a store at once due to social distancing) the challenges we are facing at Indigo are the following:

• How do we pull forward holiday demand in retail and online? Black Friday is typically the start of the sales peak for brick and mortar stores, which leads into incredible revenue numbers in the daily sales and compression until Christmas. This year we can’t have that compression – so how do we spread it out and incentivize customers to shop early? And will we have holiday stock available logically so it can be bought earlier?
• How do we shift brick and mortar demand online? Ecommerce sales in Canada is at 10%, with in-store sales still making up 90%. Indigo has seen a significant shift and increase of online sales – but some of our very best shoppers aren’t making the jump from retail to online.
• Even if we can shift more demand online, can Canada’s postal service (and other services) handle the increased load on their distribution nodes? All retailers in Canada will be trying to shift demand online – which places a heavy burden on delivery carriers and can lead to a very bad customer experience of not getting packages on time – for which customers will likely blame the brand. Given Amazon has its own delivery services, we worry some demand may shift there given how reliable they are. We are actively working to incentivize customers to shop with and remain loyal to us.”

Reduced Consumer Spending Power & Overall Uncertainty Will Change Buying Patterns

Looking beyond where consumers buy this holiday season, many leaders also predict we’ll see several big differences in how they buy, most notably in terms of quantity and price.

Ryan McGuire, VP, CRM and Email at Tinuiti, explains: “I predict holiday 2020 spending will be less than holiday 2019 spending. Given all the uncertainty right now (economic instability, racial tensions and political landscape changes), I predict consumers will spend at substantially lower levels vs. holiday 2019. I also predict there will be a shift towards ‘less is more’ in terms of holiday 2020, with some of the ‘fringe spending’ that’s occurred historically likely going away given all the uncertainties.”

Cindy Brown, CEO at Blue Moon Digital, elaborates on the likely impact of reduced consumer spending power. “What will be the most different about holiday 2020 is which customer segments will show up to shop. Historically, marketers can count on all their customer segments showing up for holiday. But that could be very different this year based on rising unemployment rates. 

For those who are still employed, there could be substantial pent-up demand. The massive cutbacks in travel, vacations, weddings, concerts, sporting events, evenings out and other special occasions have severely limited regular opportunities for discretionary spending. People who have been fortunate enough to have income at this time will have extra money to spend. Additionally, the holidays are a time of celebration and family and 2020 has been a trying year. Taking time to show appreciation for the ones you love and thinking of the perfect gifts could result in substantial spending from employed shoppers. For those who are unemployed, the holiday picture is very different. Spending will be limited to essentials and replenishment. 

In between the ‘employed, pent-up demand shopper’ and the ‘unemployed shopper’ is the ‘cautious shopper.’ The cautious shopper is still employed but the uncertainty of the future could taper off their holiday shopping budget. Until better times are tangible, the cautious shopper will limit their holiday purchases. We only know how many people are unemployed – which is at an all-time high. We don’t know the number of cautious shoppers, and they could have a major impact on the 2020 holiday season.”

The Importance of the Holiday Season to Retail & Doorbuster Deals Aren’t Going Anywhere

Despite all the changes we can expect this year, certain elements of the holiday season will remain the same. The most notable elements that industry leaders expect to stay the same are the overall importance of the holiday season for retailers and the presence of doorbuster deals.

Dan Marques, VP of Data Insights at Crocs, says: “Given the increased number of distressed retailers and excess inventories, I believe we’ll see some of the most aggressive promotions we’ve ever seen during Black Friday/Cyber Monday.”

Cindy Brown, CEO at Blue Moon Digital, takes this notion one step further, highlighting the importance of Prime Day 2020 as a gauge for the holiday season. She adds: “No question, holiday 2020 will be promotion-driven. Retailers and manufacturing brands are in a make-or-break moment, and promotions will be offered earlier and more often. While Amazon Prime Day 2020 has been postponed from its regular mid-July dates, it will serve as a gauge to what holiday 2020 will entail. Even though Amazon is the heart of Prime Day, we are seeing other retailers participating in this shopping extravaganza to capitalize on consumer eagerness to spend. Amazon Prime Day 2019 purchases generated more revenue than Black Friday and Cyber Monday combined. We can count on retailers and brands being laser-focused on Prime Day 2020 to forecast buying patterns and product category performances for holiday 2020.”

Finally, Jenn Horner, Associate Director, Retail and Consumer Goods at DEG, agrees a lot will stay the same but says the changed environment will require retailers to double down on strategies like personalization. “Like always, holiday will be a key time of year for retailers. Past holiday seasons have seen retailers focus on driving personalized offers to their consumers, and I think that will be even more important this year. 

Consumer attitudes around shopping behaviors have changed and so have their budgets. Leveraging data points to deliver the best holiday efforts for each individual consumer will be key to standing out this season, as consumers will be making conscious decisions about where they shop, what they buy and how much they spend. The more trust a consumer has in your brand and the more personalized your offer to them, the more likely you are to win a share of their wallet this season.”

Are You Ready for the 2020 Holiday Season?

Despite the unusual nature of this year, the 2020 holiday season still represents an important opportunity for retailers to grow revenue by attracting new customers and growing loyalty among existing ones.

The key to success will be preparing your brand to stay agile and take action on data in real-time to engage shoppers at a 1:1 level across channels. Click here to learn more about what it takes and how to get started.