[Discover Global Network]
This year’s holiday shopping season is likely to be very similar to the year itself: suddenly and unexpectedly unlike anything that anyone has ever experienced.
The rise of the COVID-19 pandemic has led to shops closing, consumers staying home, economies sinking, and companies thrown into disarray. While there has been some evidence that overall consumer spending was returning in the U.S. and consumer confidence was increasing in Europe, challenges abound for merchants to capture both the traditional holiday spirit as well as customers’ attention.
Merchants are necessarily responding as customers change how, where, when and what they are shopping for this holiday season. Some of the consumer trends have been occurring for years; this year’s events have merely pushed them into overdrive. Other shifts, though, have been brought on by a year considered unique in the history of the marketplace.
In all, more than 60 percent of global consumers have changed their shopping behavior while becoming more mindful about where and how they shop. “We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” Amazon CEO Jeff Bezos said in a statement.
A combination of modern technology and old-fashioned human nature has defined thisyear’s holiday season in key areas.
Broadly defined, five top trends are expected to be evident as shoppers do their holiday buying.
1. The Dominance of E-Commerce Grows
By far, the most immediate impact of the pandemic on holiday shopping—and the one that affects all others—is consumers’ preference for e-commerce. As lockdowns and social distancing have changed consumer activities throughout the world, shoppers have turned increasingly to online shopping and all forms of contactless payments. In all, an additional 110 million contactless payment cards are expected to be issued this year beyond original estimates.
Although already on the rise, e-commerce sales are expected to accelerate this holiday and further their growing dominance over in-store and face-to-face shopping. Almost 75 percent of shoppers in the U.S. said they expect to do more online shopping this year, while mobile shopping, in particular, is expected to hit record highs.
Among the most prevalent methods globally for gift-buying is to buy-online-and-wait-for-delivery. Buy online and pick up in store, or pick up at curb, are also increasingly important in today’s environment.
2. The Virtual Benefit of Selling Online
The irony of losing physical contact with customers is that merchants are actually getting to know customers in ways that are strikingly more personal. Traditional customers walking in the store leave little footprint to identify themselves or their contact information. Traditional loyalty programs rely on customers volunteering information from which merchants can build a profile.
But as purchase orders increasingly come online, tracking data—including emails, mailing addresses, and phone numbers—become more prevalent, and the opportunity to offer discounts, coupons, loyalty points, and special offers proliferate for personalized offers based on items already purchased. With this increased personalization, merchants can enjoy 20 percent higher customer-satisfaction rates and up to a 15 percent boost in sales-conversion rates. And with advanced security measures, including EMV® Secure Remote Commerce and ProtectBuy from Discover® Global Network using Three Domain Secure (3DS), online transactions from anywhere can be securely approved.
3. Non-Gift Gifts Increase in Popularity
The traditional idea of gifts is also changing. Luxury goods and products that have typically been chosen in-store are expected to underperform past years as the economic impact of the pandemic forces consumers to rethink priorities. Spending on services—trips, events, and entertainment—are all being affected.
Instead, consumers are focusing elsewhere. In particular, products related to work-at-home and home-schooling are expected to perform well, including electronic products for home offices or digital entertainment, and more casual clothing for today’s stay-at-home lifestyle. In all, more than two-thirds of shoppers say they are shifting purchases from services to products, with clothing, gift cards, and electronics the three categories of choice. In the UK, consumers are also refocusing their plans, with electronics, home, and fashion at the top of many lists.
Nearly one in three shoppers say they’ll be shopping earlier, with this year’s consumers shopping one-and-a-half weeks less on average than last year.
4. Shopping Local, Shopping Smart
For those shoppers who do venture out, health concerns further shape their preferences. One surveyshowed that shoppers are preferring local stand-alone shops as they continue to trend away from enclosedmalls. Rather than spending a day indoors browsing from shop to shop, consumers are more carefullytargeting their purchases at specific nearby retailers, preferring limited crowds and the ability to pick uptheir purchases locally.
One survey found that 47 percent of shoppers said they will buy products online and pick up either in-store or at the curb. For those looking to shop in person, in-store use of contactless payment alternatives, as well as the use of in-store kiosks, have also surged as consumers adopt their transaction methods in addition to masks, social distancing, and hand sanitizing. More than half of shoppers said they would choose stores with contactless options.
5. The Shopping Calendar Adapts
While the traditional start of holiday shopping differs among regions throughout the world, each has adapted in different ways to the current environment. China’s Single’s Day on Nov. 11, Amazon’s Prime Day, and Cyber Monday remain top events in the world for e-commerce. But the traditional Black Friday in-store crowds, and the scheduling of pre-holiday, weekend-only discounts, have all been disrupted.1
With Christmas landing on a Friday this year and fewer shoppers expected in-store, the calendar of shopping is also adapting. Delivery concerns have consumers shopping earlier, merchants discounting more frequently, and the traditional last-minute purchases expected to decline. Nearly one in three shoppers say they’ll be shopping earlier, with this year’s consumers shopping one-and-a-half weeks less on average than last year.
This year’s holiday shopping season promises to be unlike anything seen in recent history—giving rise to global trends that present both serious challenges and rich opportunities. By responding to these current shifts in customer behavior and meeting consumers where they are, merchants are able to provide the products, services, and high-quality customer experience that this year’s unprecedented shopping season requires.