In just a few short months, we have seen a substantial digital transformation. One that was expected to take around 5 years. Such a change in a short period also means changes to shopping in the holiday season.
But will the economic downturn tighten wallets and lead to smaller celebrations? Or will factors such as canceled holidays, and fewer trips to restaurants mean people have more cash available to spend on gifts?
Let’s take a closer look at how the holiday shopping season may look for merchants, what the likely outcomes are, and how merchants can get the most from the holiday season.
Table of contests:
How did the holiday season look in 2019 for stores?
In 2019, holiday sales were up 4.1 percent. Consumers planned to spend a total of $1,048 on average on items such as decorations, candy, and gifts for themselves and their families.
Last year, 56 percent of consumers reported they would make their holiday purchases online. Of those consumers, 48 percent planned to buy online and then pick up in store.
With the increase in online purchasing and BOPIS buy online, pick-up in store) as a result of the pandemic, it would be unsurprising to see these numbers increase this year.
Retail Holiday Season - 2020 Predictions
1. Holiday Season will Start Earlier and Continue Throughout Fall.
With Prime Day being rolled back, the 2020 seasonal retail calendar has been thrown out of order. With an overloaded supply chain, retailers are now hoping to spread demand throughout the Fall season, and thus streamline their eCommerce operations.
We shouldn’t expect high levels of in store action on Black Friday. Over the past few years, we've seen Black Friday, Cyber Monday, and Cyber Week blend together. This year, we expect these events will further merge with the rest of the holiday season.
Shoppers will also want to start shopping earlier, after missing out in spring due to delivery delays and low stocks.
2. Retailers will Turn to Increased Discounts More than Ever Before.
Expect to see promotions spread more evenly throughout Fall. Promotions will likely steer shoppers toward pickup or same day delivery services using personal shoppers, as opposed to home shipping options.
Deloitte LLP expects a 1% to 1.5% rise in retail sales this holiday season, with e-commerce rising as much as 35%. However, experts there say growth could be as much as 3.5% if consumer confidence rises due to a pandemic relief bill, or something similar.
With calendar chaos set to continue, and fears that buyers will withdraw from their holiday shopping this year, retailers are looking to spark that holiday spirit as soon as possible.
3. Successful Brand Messaging Must Stay Relevant to Circumstance.
All brand messaging must be relevant to the backdrop of current economic and societal reality. Shoppers will be watching how brands and retailers treat both their customers and employees.
Retailers should focus on addressing the customers during the busy Fall season. Customer service requirements are likely to rise, so it is vital to have sufficient staffing. Improvements to general eCommerce capabilities, curbside pickup, and returns could all do as much as any promotion when it comes to attracting customers.
4. Both Shoppers and Retailers will Struggle with Shipping Issues & Shipping Price Rises
Announcements from USPS, UPS, and FedEx about holiday package surcharges have also fueled the need to start holiday sales early.
With so many shoppers using eCommerce to buy, and services such as UPS forecasting a record holiday season, there are concerns about items getting to their destination on time.
5. Holiday Traditions will Remain, But in a New Form.
This has been true of every holiday so far in the pandemic. In many cases, these changes to traditions enhanced trends already present. Gift giving will be one of the most impacted areas, with items suitable for the stay at home lifestyle increasing in popularity.
Depending on what happens with the economy and any government stimulus, we may see a tale of two shopper groups. One group will pull back spending due to months of job instability and future uncertainty. The other will spend the money saved on travel and dining out to give families a joyful end to a hard year.
6. Regionality will be Enhanced.
Throughout 2020, we have seen COVID-19 and the economic situation play out differently across regions.
With fewer people traveling for the holidays, stores anchored in large urban markets are likely to have a bad Fall season. Online sales will shatter records across the globe. Furthermore, in some areas, online shopping may be the only way to buy niche or nonessential products.
Expect the push to support local businesses to continue during, and after Black Friday. This push may be the decisive factor for many merchants, as it will decide whether they succeed or fail.
2020 Holiday Season Spending Predictions
Regardless of how people plan to celebrate, retailers are prepared to safely serve customers and meet their holiday needs.
- According to Deloitte’s annual holiday retail forecast, holiday retail sales are likely to increase between 1% and 1.5%.
- Overall, Deloitte projects that holiday spending will result in sales between $1,147 billion and $1,152 billion during the November-January timeframe.
Holiday sales are likely to play out in one of two possible scenarios this season:
- A relatively stable year on year sales increase (0 to 1%)
- A more significant jump (2.5 to 3.5%)
Both are lower than in years past, and will be driven by a K-shaped recovery. The formal forecast increase (between 1% and 1.5%) is a result of melding both scenarios.
- Almost three-quarters of consumers (73%) said their overall holiday spending will either stay the same or increase this year
- 58% of respondents are concerned about their financial situation due to the pandemic. 59% plan to spend about the same on holiday gift shopping as they did last year, and 20% plan to spend more.
eCommerce Holiday Season Planning in 2020: A Guide To Success
1. Analyse Your Last Years Performance and Your Current Situation
Every good strategy starts from a proper analysis of past performance.
Analysis of Peak Periods
Start by looking at last years Q4 performance and trying to answer the following questions:
- When were the peaks of traffic?
- When did the holiday season ramp up start?
- When were the peaks of revenue?
- Did they coincide with the traffic peaks?
Answering those questions is essential to know when to plan the marketing activities needed to take full advantage of the season. You might find out that there is no point in increasing your marketing spend in October as the actual season starts in November like this year. Or maybe even November is too early, and actually it is all about Black Friday. Alternatively, it could be all about an evenly spread three-months strategy.
Product Performance and Stock Analysis
After identifying the timing of your bets performances, it is important to look at the product performance report:
- What were last year's best selling products?
- Were they seasonal products (Christmas gift cards, Elf On The Shelf, etc), evergreen products, or simply trending products of the time?
- To what extent did the top 10/20/50 products account for overall sales volume and value?
- Is there a particular product that stood out?
Knowing last year’s sales is essential, as you may need to start planning your stock imminently. In fact, you need to make sure you'll have plenty of stock for seasonal products that you will sell this year as well.
Website and Traffic Performance Analysis
Now it's time to get a bit technical and analyse what happened on your eCommerce website last year:
- What was the extent of your traffic, and where did it come from?
- What acquisition channels drove the most traffic? What channels performed best in terms of conversion rate and revenue?
- Was there too much of a reliance on a single channel? Were there any unexploited channels that can be used this year?
- Was there a correlation between marketing spend and channel performance? Did the paid ad spend generate a good ROI?
Answering these questions will help you steer your efforts and money towards the best performing channels. It is also important to compare last year’s Q4 performance with what experienced in the last 3 to 6 months.
When it comes to website performance, the first thing you have to think of is the website loading speed. It is common knowledge that site speed has a massive impact on sales, especially on mobile devices.
How strong was the effect of site speed variations on your sales? Correlate site speed data with revenue performance day by day and find out.
We currently live in a mobile oriented world, and therefore site speed is massively important to secure sales. It is one of the main competitive advantages/disadvantages you can have.
Google Ads and SEO Performance Analysis
With Google dominating the search space, the chances are that you as a retailer, make strong use of Google Ads, and search engine optimization. This offers a great opportunity to analyse last year’s performance to spot seasonal trends and potential missed opportunities.
- Search Terms Report
First look at the search terms report. You can download it from Google Ads and make sure you include basic metrics like clicks, impressions, conversions, spend and revenue.
It is important to compare the site search queries with PPC and organic searches. You might find some queries you had not thought of, and can be valuable to target in PPC or SEO.
- Google Ads Campaign Performance
After analyzing the search terms performance and timing, you want to analyse the last years Google Ads campaigns performance to see if you can improve anything on the previous year.
In particular, what campaign types did you run, and what campaigns performed best?
Allocating your budget towards the campaign types that work best will be essential to secure a good ROI. Again, it is important to evaluate the timing of performance.
Shopping Campaign Analysis
Google Shopping campaigns are particularly important for retailers. Go to the products tab in Google Ads and analyse the previous year’s product performance on Google Shopping.
- What were your most costly products?
- What are the products that drove the most conversions?
- What are the products with the highest ROI? Are they seasonal products or trending products?
- Compare different product categories performance. Did they perform in different ways?
2. Craft Your eCommerce Marketing Strategy For The Holiday Season
Setting Your Goals
Now that you know what happened last year, it is time to set the Q4 objectives and predictions accordingly. A great way to set your goals is to use a SWOT (Strengths, weaknesses, opportunities, threats) analysis.
Learn from past performance to identify internal weaknesses, and start planning in advance how to overcome them.
- If you have a stock problem, work with your logistics department from now to make sure it won't happen again.
- If your site was slow, and couldn't handle high peaks of traffic, start planning with your developing team how to optimise its performance, and make sure site speed will be consistent.
Look for opportunities that you might have missed.
Opportunities may include: Seasonal products that you didn't stock, well-performing products you didn't allocate enough Google Shopping budget to, search terms you didn't target with PPC, etc.
Here you can find some Q4 goals examples:
- x% of products in stock
- x sec load speed
- Stock and merchandising of seasonal product categories that performed well last year
- PPC keywords and shopping expansion
Having clear goals is the first step to a successful strategy.
Setting the Strategy
Based on the goals you have set, it is now time to craft the strategy.
- Work towards more streamlined communication between the eCommerce and logistics departments.
- Closely liaise with the web development team in order to improve website performance and site speed.
- Build an SEO strategy which focuses on landing page creation for the most popular categories of products.
- Work closely with your trading department to predict trends, and set a list of products your SEO and PPC strategy should focus on.
3. Prepare your PPC Strategy for the 2020 Holiday Season - A Checklist
- Optimise your product feeds.
- Organise your shopping campaigns in product groups so you can set bids accordingly.
- Make lists of products based on seasonality and predicted trends.
- Give priority to those products in your Shopping and Search Campaigns using Google Shopping Supplemental Feeds
- Expand your keywords range including seasonal searches and seasonal products
- Create specific campaigns/ad groups for Black-Friday and Cyber-Monday-related searches
- Make a smart use of Dynamic Search Ads campaigns. Create separate ad groups for every product category.
4. Take Action
You’ve spent the last few months analyzing and planning the strategy, now it is time for action! The sales ramp up has started and it is time to evaluate your strategy performance:
- Is your plan working?
Pull daily eCommerce reports to keep track of your results and see if they align with projections and targets.
- Are the top-selling products in line with what you predicted?
If not, you have to be ready to respond quickly.
Focusing your strategy on feed-based advertising like Google Shopping and PPC can be helpful to quickly steer your efforts and budgets towards a different set of products.
If your strategy is not working as expected, you have to change it.
- The weekend of Black Friday and Cyber Monday alone might account for one third (or more) of the whole season's sales. Keep track of hourly results, and act if needed.
- Get prepared for a huge spike in traffic, and make sure your website is prepared to handle it. Key metrics to keep an eye out during the sales peak are: sessions, conversion rate and revenue.
Don't stick to your plan and numbers if you see these are not working anymore. After the Cyber Weekend peak, you still have roughly 4 weeks before Christmas to try to resolve any issues.
Make sure you keep optimising your campaigns. It is not time for trial and error anymore. Now you have to focus on what works, and alter anything that is failing to do so.
This is a year that is certain to be unlike any other. Retailers need to be ready to anticipate, and create strategies that will convince buyers in this unpredictable time.
In summary, we expect the Fall season of 2020 to be an abrupt and wild ride, for both buyers and sellers. Certain items and product categories will take off unexpectedly, and purchasing behavior will be determined by factors outside of the retail.
Retailers should now get ready to respond to changing buyer behavior. eCommerce, curbside shopping, and the use of mobile devices are liable to take off, with shoppers continuing to avoid physical stores.
As always, there will be winners and losers this holiday season. It will still be fascinating to watch the season unfold, and see what good news emerges from the ever fluctuating world.
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