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Consumer Trends: Holiday Edition

As COVID-19 continues to spread, consumers are expected to make their purchases online to avoid the crowds this holiday season. Many large retailers closed their doors on Thanksgiving and Black Friday, shifting their strategy to e-commerce.

Have you started your holiday shopping yet? With December upon us, we decided to dive into the consumer trends and unravel what is expected this season. Certainly, the merchandising landscape is dramatically different from 2019, with the pandemic taking center stage in holiday ad campaigns.

How will consumers shop?

Amazon finds itself in an enviable position this year. Not surprisingly, there will be minimal physical crowds heading into brick-and-mortar stores. As many as 4 in 5 individuals surveyed have concerns regarding the pandemic. This sentiment will bring dramatic changes to the consumer landscape as shopping will be concentrated on e-commerce platforms with a corresponding drop in physical purchases. Consumer expectations for in-store shopping focus on safety, with most surveys indicating that places that prioritize healthy and hygienic practices will draw the lion’s share of shoppers.

This holiday season will bring continued increases in online shoppers utilizing digital apps and couponing apps as the technology sector continues to shape how merchandise is sold. The expectation is that apparel, toys, video games, and electronics will be the big leaders in holiday sales.

How much are consumers going to spend?

The most surprising expectation is consumer holiday spending has the prospect of growth. Holiday spending has historically been dependent on discretionary funds. With high unemployment rates still affecting numerous industry sectors, holiday spending is only expected to decrease slightly. A recent survey discovered 63% of Americans are expected to spend a similar amount of money as they did during the 2019 holiday season. During Black Friday, E-commerce was the big winner showing significant growth. According to Retail Dive, digital sales hit an all-time record with a 21.6% increase from last year hitting $9 billon.

The re-engineering of the way we approach traditional merchandising sales has demand trending surprisingly strong, particularly with the encouraging news that there are now several viable vaccines approaching the market. Furthermore,  holiday shopping may be a way for consumers to take a break from the stress of the pandemic by online/instore shopping to have some normalcy this season.

What are the retail strategies for this holiday season?

Retailers are faced with a significant challenge navigating through COVID-19. Success will hinge on their ability to connect with their target audiences. Retailers command of sales projections and internal logistics will be crucial to determine how much merchandise to carry in their warehouses. Companies who are more successful in identifying their projections will be much better positioned to maximize their sales over the holidays.

For in-store shopping, major sales will be spread out over longer periods. For example, Kohls has spread its Black Friday sales over a month. Also, several major retailers, including Target, Wal-Mart, Macy’s, and others closed their doors on Thanksgiving. In exchange, they’ve focused on their holiday deals to begin earlier and extend past Black Friday, with the hope that they can recapture sales lost in the early months of the pandemic. It’s hoped this strategy will prove to be an effective way to maintain sales while managing safety.

What are your takeways from this

Retailers will view the upcoming holiday season as a time of tremendous uncertainty. The successful ones will approach the season with the viewpoint that there is a significant opportunity and a time to shift their strategy. The confluence of marketing, technology, and logistics will be more pronounced than ever before. Black Friday kicked off the holiday season confirming many’ s predications of a large shift to online sales. The 2020 holiday season is unlike any other before, creating many lessons learned and new strategies for future seasons.

Author: Andrei Adams, CPA | aadams@withum.com

For any questions or further information, please contact a member of Withum’s Consumer Products Team.

Consumer Products

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