With the coronavirus pandemic creating wide adjustments to consumer behavior, brands and retailers are having to rethink how they will approach the soon to arrive, holiday shopping season.
According to experts from Dynamic Yield, the experience optimization platform that works with brands including Sephora, Urban Outfitters and Ikea, this season will look much different from years past. Experience-minded gifts, a favorite in 2019, will see decreased engagement as consumers continue to socially distance and the competition for online sales will heighten.
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The largest change, said Shana Pilewski, director of marketing at Dynamic Yield, will be an even greater shift to online shopping. And with many stores planning to remain closed this season, “there is increased competition to capture the attention of consumers likely shopping online from the comfort of their own homes.”
Here, Pilewski talks to WWD about the COVID-19 impacts on the upcoming holiday season, the rise in e-commerce, and how retailers can prepare for a successful season.
WWD: How do you see COVID-19 impacting consumer behavior in the upcoming holiday shopping season?
Shana Pilewski: During Black Friday/Cyber Monday last year, we examined the changes in consumer online shopping behavior and found that consumers were spending more on fewer products — globally, shoppers spent approximately 23.7 percent more per item but bought 6.1 percent fewer products. This year, given the financially strained climate, we expect to see this trend continue with some consumers spending larger amounts on fewer, higher-quality purchases.
WWD: From your perspective what will be the biggest change in this year’s holiday shopping season?
S.P.: The biggest change that we are already seeing in consumer spending this year is an even greater shift to online shopping due to COVID-19. With many stores set to remain closed this season, there is increased competition to capture the attention of consumers likely shopping online from the comfort of their own homes.
Given these changes, the traditional Black Friday/Cyber Monday-specific sales will likely blur into a single, extended period of highly concentrated purchasing. In fact, this trend was already beginning before COVID-19 — sales have been starting earlier and earlier each year with Black Friday/Cyber Monday stretching beyond 24 hours into weeklong shopping events, as we found last year.
We also foresee a significant shift in what consumers will purchase. In recent years, more and more U.S. adults have expressed interest in receiving experience gifts over material items. Because COVID-19 makes these experiences complicated and far less safe, there will likely be more engagement with traditional, material gifts this season.
WWD: With a shift to material gifts, will consumers continue to look for items that are conducive to the country’s social-distancing orders?
S.P.: Yes. People have finally begun to settle into new routines, working from home, and spending extended periods indoors and online. Comfort items — such as leisurewear, self-care products and at-home exercise equipment — have grown steadily more popular during the pandemic and are likely to be a safe bet for gift-givers looking to provide value. And, with many unable to visit and be with their loved ones in-person this year, people will be seeking to give highly meaningful and personalized gifts.
We also believe that historically popular verticals, such as consumer electronics, will remain in high demand this season. Extended sales and competitive prices may also lead consumers to make aspirational purchases — expensive items they’ve saved up for and will use now or post-pandemic.
WWD: Do you see this holiday shopping season as a tipping point for consumers to shop even more online?
S.P.: Our research last year showed massive peaks in online traffic during the Black Friday/Cyber Monday weekend with retailers seeing a 58.2 percent increase in their average daily visitors. Given that we have already seen a significant rise in online spending as a result of the pandemic, this holiday season is likely to greatly surpass what we have witnessed previously.
And with even steeper competition spurring retailers to significantly up their games this season, consumers who historically didn’t rely as heavily on online shopping will now be exposed to a plethora of new e-commerce sites and brands they would have never been otherwise.
Therefore, those retailers who are laser-focused on delivering exceptional customer experiences through personalization will open doors to potentially year-round relationships, long after the holiday season is over.
WWD: How can retailers engage those consumers who are missing the in-store experience this season?
S.P.: In-store shopping offers consumers particular experiences that cannot be fully re-created online — the ability to physically engage with products, communicate with store staff and so on. Retailers can employ a number of online strategies to virtually simulate this engagement and deliver similarly valuable experiences online.
Retailers can leverage algorithmic recommendations to guide users toward highly relevant products based on their on-site browsing activity, product affinities and past purchase behavior. This helps customers quickly find the products they are interested in, akin to having in-store staff direct them to where they will find their desired items. Personalized recommendation widgets can be leveraged site-wide and incorporated into accurate and relevant e-mail outreach as well, ensuring consistency throughout the customer journey.
Product detail pages can also be enhanced to offer greater value to customers who are unable to physically interact with the product. Rather than vague descriptions and unclear images, retailers should seek to incorporate as many details about the product as possible to aid customers in their decision making. Strong product imagery, social proof elements, such as written reviews and star ratings, and widgets that showcase the number of views, add-to-carts, or “frequently bought together” items are all helpful ways to enable customers to better assess and engage with items online.
Brands and retailers can also better attract and engage customers by offering value beyond products through touchpoints that aren’t necessarily transactional in nature. Delivering compelling and relevant editorial content, an advanced look at new products, concierge shopping or personalized coupons, for example, are strategies retailers can employ to stay present in their customers’ lives and initiate and measure customer/brand engagement at a time when physical engagement is less viable.
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