Technology
Preparing for a pandemic holiday season
Sanjeev Sularia, CEO and co-founder of Intelligence Node, writes that the key to a successful holiday sales season are efforts and investments focused on understanding and catering to consumers' demands and behaviors.
August 27, 2020 by Sanjeev Sularia
The impact of COVID-19 on consumer buying behavior has been extensive and quick. Spending across most industries has decreased, purchases have shifted from in-store to digital channels, and public safety has become the priority for brands and consumers alike.
As retailers prepare for the long haul of what we now call the "new normal," the desire to win the upcoming holiday season is higher than ever before. To succeed, retailers must focus their efforts and investments on understanding and catering to consumers' demands and behaviors. Come November, those who are still testing technology or channels will fall behind the pack. To set themselves apart, retailers need to roll with changing consumer behavior and, with in-store shopping making up a smaller portion of holiday shopping, enhance every digital touchpoint.
Before we delve into the current customer and retail landscape, let's take a trip down the memory lane and examine the challenges and triumphs retailers endured last season.
2019 holiday shopping: Healthy, despite recession threat
Despite a late Thanksgiving and concerns about tariffs, consumers did not shy away from shopping during the 2019 holiday season. The U.S. economy's strong employment numbers, high wages, and steady household incomes all lead to a healthy holiday season. In fact, according to the NRF, during 2019, holiday sales increased by 4.1% over the same period in 2018 to $730.2 billion.
Although customers were doing their part to keep the economy moving, rumors in 2019 of a potential global recession prompted some to express caution when shopping. Yet, once January rolled around, the retail industry saw a nice bump in sales overall. This momentum was short-lived as the pandemic hit and caused a global recession. As a result, the average American consumer felt the strains of unemployment and economic uncertainty and became frugal with spending.
2020 looks different: COVID pushes shoppers online
Heightened fears of the pandemic, along with social distancing and continued lockdowns, have shifted shoppers' preferences and pushed them online. In fact, at the onset of COVID-19, the products and categories consumers gravitated to drastically changed. A newly released buying behavior report noted that amid the pandemic, 1 in 3 customers reduced their spending on fashion, electronics, and home decor.
Even as stores begin to reopen, the report data suggests 82% of shoppers plan to continue shopping online. The global health crisis has pushed unconventional social norms to the forefront and birthed an entirely new segment of first-time online shoppers, forcing them to adapt and assimilate new methods of shopping. To capitalize on the digital traction channels will receive this holiday season, retailers need to begin planning earlier than before. And, with 26% of respondents in the same report indicating that they plan to make substantial cuts this holiday season when shopping for gifts, the race to win consumers' dollars has higher stakes than ever.
Retailers race to adapt, go digital
To captivate consumers' attention, retailers will need to rely on AI-enabled capabilities. For example, to drive customers back to their storefronts, physical retailers can start with tapping into digitally-enabled touchpoints like contactless payments and buy online and pickup in-store (BOPIS) to accommodate consumers' need for convenience and safety. While online, the use of self-service capabilities like AI-enabled chatbots will be vital for helping customers to find products or track a package with ease.
As summer comes to a close and holiday promotions gear up, companies will need to be more proactive and agile in addressing customer expectations and needs via online channels. Pre-holiday is the time for brands – big or small– to invest in data, technology, and systems that enable exceptional shopping experiences on-and-offline.
A pandemic christmas: What to expect
Social distancing has become part of the new norm, and customers will demand that retailers rethink and readjust the in-store shopping experience accordingly. For brick-and-mortar retailers, omnichannel capabilities like curbside pickup and BOPIS will be essential avenues to explore for the holiday season. Particularly for last-minute shoppers — where two-day shipping isn't fast enough or is otherwise impacted by shipping delays with the pandemic — who will seek out the convenience of ordering online or via mobile and picking up inside or outside a physical store within a matter of hours. Retailers should also look to implement contactless technology like mobile payments or self-checkout kiosks to make consumers more comfortable returning to in-store shopping.
On the online side of the spectrum, because consumers are now online for extended periods, winning mind share, and wallets will be more of a digital race than ever before. One way to ensure shoppers enjoy a streamlined digital shopping experience is by providing fast online checkouts accompanied by free or expedited shipping options. With just 29 days between Thanksgiving and Christmas this year, consumers will flock to the retailers that offer the best last-minute deals and shipping options at the click of a button.
AI saves the day
With the volume of online orders expected to surge this holiday season, last-minute delivery has a whole new meaning for retailers. Now is the time for retailers to troubleshoot logistic and inventory issues to ensure their operations are running like well-oiled machines. The ability to deliver packages on time will make or break retailers as they run the risk of disappointing customers and losing their business.
Retailers across multiple categories are feeling the economic blow of the pandemic. As we get closer to the holiday season, more retailers will file for bankruptcy, while others will make great strides in regaining their footing.
More than ever, retailers will need technology to enable every touchpoint of the buying experience. Refining BOPIS operations and deploying contactless technologies will provide convenience and ease for in-store holiday shoppers. As for the online holiday shopper, they will gravitate towards the retailers that offer a seamless experience from start to finish and deliver with speed. Last year's holiday playbook is irrelevant, and retailers must plan accordingly and invest in the right technologies to ensure they're providing customers with the holiday joy they seek.
Sanjeev Sularia is CEO co-founder of Intelligence Node.
