Pandemic to Create Strong Headwinds Against Holiday Spending This Year
With consumer behavior changing rapidly due to unprecedented times, industry experts and consultants expect this holiday shopping season to be a far cry from those past.
Due to the pandemic, consumers have experienced a vast amount of uncertainty — leading to fear, anxiety and conservative spending.
“Over 40 percent of Millennial and Gen Z shoppers expect to spend less this year, with a greater proportion of younger shoppers indicating this compared to older Millennials, according to our survey,” said Deborah Weinswig, chief executive officer and founder of Coresight Research, a global advisory and research firm specializing in retail and technology. “Younger shoppers are early on their jobs or are recent graduates and will be heading into the holiday season with a lower propensity to spend, given their low incomes compared to older shoppers. Savings rates in the U.S. are also on the rise, and younger shoppers are likely to want to be frugal spenders until the dust settles around the crisis.”
“We also have seen that individuals under 35 are increasingly concerned about making upcoming payments. That, combined with other economic indicators, mean that we will be looking for additional signs of rising financial concerns,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “COVID-19 has already left an indelible mark on the way consumers shop. We’ve seen significant growth in digital channels and a shift toward safer, lower-contact models, which is likely to continue during the course of the holiday season. Many retailers have historically looked to create welcoming shopping experiences so consumers would spend time browsing and looking for the perfect gift. This year, consumers might be looking for that influence online and through other social channels.”
According to a recent poll by Bazaarvoice, social will be key for retailers this holiday season. In the report, Bazaarvoice noted that 61 percent of businesses polled “anticipate higher engagement and purchasing through social media for the holiday season because of COVID-19.” This includes shoppable social content for channels including Facebook and Instagram and partnering with influencers.
“Retailers must be prepared to pivot quickly as things change. The focus should be on continued and strong messaging and reassurances of protocols via social media, i.e. Instagram, Facebook,” said Antony Karabus and Farla Efros, ceo and president of HRC Advisory. “Texting, TikTok, retailers’ web site and signage in stores to give them more assurance of safety.”
While a digital-first approach was already under way, as foreseen by many, experts say the pandemic has amplified other trends, too. Convenience, which was a buzzword for holiday 2019 and a key factor in consumers’ decision-making continues to be on shoppers’ minds as they consider plans this season.
“COVID-19 accelerated trends that were already picking up in retail and in other industries,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “A primary [trend] for retail has been the growth in online shopping. In fact, according to Deloitte’s State of the Consumer Tracker data, over recent weeks, we’ve seen that only about half of consumers feel safe going to a physical store. Keeping that in mind, this holiday season will likely continue to push the boundaries on the importance of online, convenience, the role of the store and the importance of safe and speedy fulfillment.”
This speedy fulfillment comes in many forms, with buy online, pick up in-store seeing increased popularity over last year.
“We think that there will be a shift to digital retail buying online and retailers are going to have to counteract that shift with the incentivization incenting consumers to buy online but pick up to the store,” said Michael Brown is a partner in the consumer practice of global strategy and management consultant, Kearney. “Retailers won’t be able to ship at the rate that people will shop online and they’re going to need to leverage these forward-facing environments to fill the demand and encourage consumers to come out there and take their goods up on their own, and develop processes down in the store and pick-up locations that make it easy and convenient for the customer to do it.”
“The biggest change that retailers are going to deal with is going to be the unpredictable nature of the holiday,” Brown said. “They have no idea of what’s in front of them. When we operate in what we call a no normal environment. The unpredictability will be the biggest change because at a moment’s notice stores can be shut down. You know, legislation can prohibit them from doing different things so that’s what we have to be ready for is just an unpredictable holiday.”
For More WWD Business News:
Will Rapid Changes in Consumer Behavior Impact Holiday Shopping?
Fleeting Shopping Behaviors and a Digital-First Holiday Season
Report Reveals Needs of Aging Consumers, Impact of Recession
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