In the wake of the pandemic much about retail has changed in 2020. Many of the digital trends that had been transforming the industry were accelerated, as was the demise of many classic retail brands (J. Crew, Brooks Brothers, Lucky Brand, JCPenney, Neiman Markus, Pier 1 Imports). While the retail challenges are not new, the impacts during COVID-19 ran much deeper.
Looking ahead to the holiday season, many brands are pinning their hopes of long-term sustainability on holiday sales, which in recent years have started well before Black Friday. According to the National Retail Federation, roughly 35 percent of shoppers begin holiday shopping before the end of October. Will an anticipated growth in the holiday season rise the tides for all brands, or expose deeper gaps between brands that effectively use consumer data to create digital differentiation and those that lag?
In that light, Redpoint Global wanted to get a sense of what the 2020 holiday shopper wants from brands and the trends that will be shaping this season. Redpoint recently surveyed 1,000 U.S. consumers via Dynata research. Here’s what they had to say:
Personalize or Perish
In the survey, 70 percent of consumers say they will exclusively shop with brands that can demonstrate that they personally understand them this holiday season. Shoppers are going increasingly digital and as they do so, their expectations around personalization are also increasing.
Personalization motivates purchases with nearly half (49 percent) saying they will be more likely to purchase from retailers who sent personalized content and/or offers this holiday season. Today’s consumer sees being understood by a brand as table stakes. In the survey, 82 percent of respondents expect that retailers will be able to accommodate preferences and expectations and brands that can get this right will be rewarded.
Two-thirds of respondents say they want retailers to make personalization consistent and without friction, no matter the channel. They want the same understanding from a company whether shopping on a website, in-store, via a mobile app, or reaching out to a call center.
Friction Breeds Frustration
Receipt of irrelevant offers is a top consumer frustration for the second year in this survey. Thirty-nine percent of consumers say that they become overwhelmed by marketing from retailers during the holidays, so striking the right balance of personalized communication at the cadence the customer prefers is as important as what the marketing materials say.
Retailers can manage the cadence and personalization across all channels by creating a golden record that provides marketers with a deep understanding of individual customers needed to hyper-personalize messages, offers and actions. This is key to closing the gap between customer expectations and the actual experience a brand delivers.
Keeping stocked shelves digitally and physically is important. Out of stock items remains a major point of friction for many consumers during the holiday season, 36 percent rating it as a top frustration. Transparency in communication around delays is a major factor in managing customer expectations and speed in response is key to managing this process.
How people shop is dramatically changed as well, with 62 percent saying they would shop exclusively online this year. While e-commerce will be crucial for holiday shopping, retailers should ensure they bridge the gap between physical and digital channels as 50 percent of respondents plan to take advantage of buy online, pick up in-store (BOPIS) and curbside pickup capabilities.
Customer Expectations Managed
The retailers that use real-time data to understand individual consumer preferences, make changes the data show are needed, and effectively leverage multiple digital channels will be much more successful in securing consumer spend this holiday season.
rgOne™, Redpoint’s fully integrated solution, enables a single point of control to connect customer data and execute marketing campaigns that can change for the needs of the consumer. With the platform, retailers can deliver personalization at scale and dramatically reduce any gap between consumer expectations and customer experience.
To gain this single customer view, data must be cleansed, unified and integrated to create an accurate profile of each customer over time – including online/offline behavior, preferences and purchase history. Automated machine learning capabilities enable brands to deliver highly relevant interactions that are in the context and cadence for each customer. With automated machine learning optimizing the recommendations, brands can deliver consistent omnichannel customer experience at scale.
Instability Could Impact Sales
Some consumer pockets will not be as deep – While more than half (56 percent) of consumers expect to spend the same this holiday shopping season, 27 percent say they will spend less due to economic uncertainty. For retailers, this means the competition to stand out and win over the small segment of shoppers increasing buying will be even more important.
The overall impacts on the industry are less than one might expect with all the economic, political and health uncertainty in the U.S. The National Retail Federation forecasts that retail sales during 2020 will increase between 3.5 percent and 4.1 percent to more than $3.9 trillion. This is less than the predicted growth but is bolstered by online sales that have grown nationally between 12 to 15 percent during the pandemic.
The distribution of where sales growth may happen is the factor that may impact individual businesses. Purchasing may become increasingly concentrated to the brands prepared to meet the personalization, frictionless buying experience that consumers are demanding. If ill-prepared to adapt to the changing consumer habits, brands will not only miss out on the growth potential but may possibly fail to exist in 2021 and beyond.