2020 holiday retail trends will be like nothing we’ve seen before

Consumer shopping for the holidays
Erin Peddle

2020 has been full of surprises, challenges, and adjustments—and it’s forced all of us to be ready to adapt quickly to change. So, it only makes sense that this year’s holiday season will offer up new trials to overcome, some of which may surprise you.

At SMS Assist, we’ve been having a lot of conversations with retailers about what they’re expecting. And while we all agree this season will surely be unique, here are a few insights on what to expect.

1. It’s starting earlier

Retailers are already rolling out strategies to meet the unique demands of our current world as it relates to what can be described as their most critical season.

And consumers aren’t waiting until Black Friday to start their holiday shopping.

Recently, the Centers for Disease Control and Prevention (CDC) added shopping in crowded stores, before, on, or after Thanksgiving to its list of higher risk activities.

With consumers wanting to avoid crowds, while still craving that in-person shopping experience, retailers will extend their shopping season.  Move aside Halloween, some retailers have already started their holiday sales.

Amazon’s Prime Day launched on October 13 this year, kicking off the start of the holiday shopping season. Retailers like Target, Kohl’s, Best Buy, and Walmart followed suit by launching their own holiday kickoffs.

Not only is it starting earlier, but you can expect changes to historical holiday traffic patterns. Work from home means flexibility to run out to the store in the middle of the day. This—paired with the desire to avoid the busiest shopping days and times—means consumers will likely spread out holiday shopping into a handful of mid-day shopping breaks instead of devoting an entire day or weekend.

2. Wish lists look a little different

Since March, we’ve all gotten used to a different kind of lifestyle.

We are now staying in for the most part, cooking at home, hosting small get-togethers, working out in our bedrooms and living rooms, learning about home repair, or taking up strange new hobbies. Many have shed that pesky commute, exchanging it for a slipper-clad shuffle to their makeshift home offices. As the way we spend our day is now different, the things on our holiday gift list have also changed to support this new way of living.  

Expect a surge on gifts that improve the quality of life at home. Items like décor, office supplies, health and fitness equipment, kitchen gadgets, and hobby supplies will be at the top of many wish lists this season.

3. Supply chains could struggle to keep up

Although it’s impossible to truly predict anything in today’s new world, experts are saying consumer demand is still there and is expected to increase this holiday season. Despite the pandemic, 73 percent of consumers said their overall holiday spending would stay the same or increase, according to the PowerReviews Holiday Consumer Survey.[1]

Deloitte expects holiday retail sales to increase between 1 and 1.5 percent this year.[2]

This somewhat normal demand will likely apply strain to an already pandemic-stressed supply chain.

Two key issues keeping retailers up at night are, one, how to keep their shelves stocked, and two, how to accommodate in-store pickup options and safely manage in-store shopping crowds. A few strategies include:

  • Anticipating consumer needs: It used to make sense to study historical trends and sprinkle in a few emerging ones when determining the level of demand. Most merchandising strategies happen six months in advance. The trick will be avoiding shortages for items that are relevant now that historically weren’t as popular last year. 
  • Tightly monitoring sales: Keep a close eye on sales at the product level and be ready to pivot when trends emerge. Work closely with marketing teams to mobilize campaigns as merchandise supply and demand shifts.
  • Thinking outside the box:  Or inside the box. We are seeing several retailers convert dark stores or “back of house” into mini fulfillment centers. Having more local distribution allows retailers to easily shift merchandise to meet demand.

4. Retail table stakes now include curbside or in-store pickup

Over the summer we saw a significant increase in curbside pickup. Retailers that previously didn’t offer it, quickly adapted in order to keep up with consumer expectations. But weather will introduce some new challenges to the mix.

When faced with inclement weather, snow, and ice, customers will opt for options that allow them to stay in the warmth of their cars. This means potential lines of cars waiting to pick up orders.

Special considerations and attention to parking lot maintenance and safety is critical and should be front and center for retailers’ seasonal strategy. Consider dedicating larger spaces for pickups to create safer spacing during slippery conditions. If you historically stack snow in the parking lot, you may want to haul or melt it this year, using the saved space to make up for dedicated pickup.

5. Online shopping is popular, but it won’t replace the in-store experience

Holiday e-commerce sales are expected to increase between 25 and 35 percent year-over-year, according to Deloitte[2], but there’s still something special about the full experience of holiday shopping. It’s something a lot of us look forward to each year, turning it into an all-day event (or more likely multiple days).

Some retailers rely on in-store shopping. Treasure hunt and impulse buy retailers like HomeGoods, Tuesday Morning, Target, and Michael’s, will feel the pinch of an ill-suited e-commerce model. When my local T.J. Maxx finally opened its doors, the line was three blocks long … for days.

The good news is that retailers were forced to take a crash course in safety and have plans in place, but the holiday season will require a ramp up to these strategies. A few things to consider:

  • Increase cleaning and access to disinfectant to account for bigger crowds.
  • When limiting the number of people in your store, make sure you have a plan for lines of people outside.
  • Inclement weather can make lining up tricky. Consider adding coverings to protect your customers from snow.
  • Put up additional signage to direct traffic and enforce safety and protection protocols.

6. There will always be last-minute shoppers

Even though the holiday shopping season is starting earlier, we can always count on those shoppers who will wait until the week or even day of to do their shopping.  

Have a plan in place to address those unexpected surges in foot traffic. Consider adding security and staff to support traffic flow.  Perhaps offer personal shopper services to customers as they wait in their cars.

It’s been a year we could have never predicted, and the retail industry has felt its consequences. As we enter another busy holiday season, it will be the savvy retailers who react and adjust their strategies to fit the new trends that will make the most of these unusual times.

[1] Power Reviews: https://www.powerreviews.com/events/new-holiday-research-shows-2020-holiday-spending-increase-stay-the-same-us-consumers/

[2] Deloitte: https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/a-tale-of-two-holiday-seasons-as-a-k-shaped-recovery-model-emerges-consumer-spending-heavily-bifurcated.html