Christmas 2020 will be… very different to what we have grown used to as both retailers and consumers. For some it may be worse, whilst for others it will be considerably better, but there is one thing for sure, this is going to be the season of distance gifting and many of our retailers’ staple peak operational practices will need to be sharper and implemented earlier than ever.
Reasons for change
Without labouring on these, as you have undoubtedly had your inboxes inundated with scary headlines and overused words, below are some of the reasons we need to adapt this peak:
- Tighter lockdown measures launched on regional levels, will likely get more restrictive before Christmas
- People being discouraged to meet socially
- Consumer uncertainty at risk levels in public places, inevitably impacting high street footfall
- Furlough scheme ending, replaced by a new scheme putting more emphasis on employers funding people out of the day to day businesses
- High levels of unemployment, with more likely to follow
- Second wave of the pandemic to be worse than in the spring
Many households will be suffering from some of the above, coming to terms with lower incomes, job losses or the mental stress of these. This in turn will mean that Christmas will certainly be more local, smaller and involve less spending.
There are however some sections of the consumer populous that have had more positive experiences of the pandemic. Some people have been unaffected by the furlough scheme or job redundancies, but were forced to spend more time at home, therefore crucially spending less over the year through reduced commuting costs, saving on holidays and socialising out of the home. Will this manifest in a pent-up demand that will almost certainly be moved from high street into more online retailing, particularly with the levels of discounting and offers I am expecting?
A Retail Week survey revealed that over a third of consumers are planning on spending less this Christmas, with 1 in 12 planning on spending more.
Our own Summit survey of consumers this week revealed that of shoppers who previously shopped in store 36% plan to shop only online, with 40% surveyed simply saying they do not feel comfortable shopping offline in the pandemic.
When asked about the level of budget available for Christmas, 65% of those surveyed would not be spending less than 2019 in peak, with 1 in 4 people planning on spending more than last year.
Peak shopping will be sooner and last for longer
Traditionally as a consumer and a retailer, the focus on Christmas ramped up after the last trick-or-treat doorbell had been answered, and the embers of the local school bonfire were barely smoking. But thanks to Amazon we can fast forward at least 2 weeks, as they moved their traditional Prime Weekend Bonanza from the summer to October 13/14th and it was huge.
The increased pressure to be socially responsible and the ever changing government guidance (I do have some sympathy here) will in my view result in a very family-centric Christmas experience for most people, thereby shining a light on some verticals that will suffer the brunt of reduced spending. These being the travel industry, hotels and party venues, fashion, pubs and restaurants, and grocers too due to less domestic parties and gatherings.
Retail executives and industry titles are of opposing views of Peak 2020; many believing we will experience 10 – 25% reduced consumer spend, whilst others assure us that it will be the biggest Peak yet, but who knows what will play out?
Retail Week’s survey suggests that 71% of consumers will not visit the high street due the government guidance and rules. Add that to the 65% of people that are planning to do their Christmas shopping online vs. 50% in 2019 and it is clear that whatever happens over the next 10 weeks, e-commerce is in for its biggest Christmas on record.
Top 7 distance gifting rules for retailers
There are several reasons why these tried and tested e-commerce rules will be more important than ever this ‘Golden Quarter’. Not least the pressure on stock and availability (a mix of retailers not buying stock in the spring / summer and the earlier start to peak shopping), the gifting events of Prime Day, Black Friday and Cyber Monday converging, launches of key electricals such as the new iPhone, next gen gaming consoles, and pressure on operational infrastructures.
Here are my top 7 distance gifting rules for retailers:
1. Gift wrapping services
With less travel expected this Christmas, there will be a higher demand on gifting direct to the recipient’s door, therefore putting emphasis on gift wrapping at source rather than at home and hand delivering. This will put pressure on gift wrap operations to be efficient and ready much earlier than usual.
Using ‘free gift wrapping’ as a tactical offer might be the difference in winning or losing that Christmas sale.
2. Gift cards and vouchers will be the new Christmas credit
For the same reasons as gift wrapping being so important this year, gift vouchers and cards will be the new currency for relatives, god-parents and friends alike to give to loved ones when they don’t quite know what to buy, but want to offer something more personal than cash.
If you offer gift cards and vouchers, make them more prominent and a key part of your Christmas offering. Whether physical or digital vouchers, present them well, with festive packaging and even extended redemption periods. These will be the default for unsure Christmas gifters. If you do not have this facility you will need to action quickly, particularly if your competitors do.
3. Delivery – free vs. fast
No retailer enjoys giving delivery away for free as the cost is always there to bear and the more orders on free delivery – you’ve guessed it – the more margin eating cost for the retailer. However, consumers love free delivery. According to a survey by returncustomer.com, 93% of consumers prefer free shipping to discounts. A study by Forbes carried out before peak in 2019 found that over 50% of consumers avoided retailers that didn’t offer free delivery, whilst a whopping 77% have abandoned a basket because of unsatisfactory delivery options, with a further 30% adding more items to their basket to meet free shipping thresholds.
With more people working from home than ever, fast shipping will be less of a battle ground. So, choose your carrier services carefully and offer a ‘non next day’ free delivery service as an always on. You can delight your customers at a much lesser cost.
4. Extended returns window
Whilst it is vital to get your delivery service and options right to meet your customer needs, my e-commerce mantra has always been ‘if you are difficult to return to – you are difficult to buy from’. Never has this been truer in a supercharged e-commerce world. If you fail your newly acquired customer on returns and service, you will likely never get them back again.
Give your customers confidence and comfort that they can buy from you with ease this Christmas. Extend your returns window to January 2021. Consider making returns free of charge. Look to pass refunds back to your customers at a sensible speed – in days rather than a month.
5. Payment Methods
There is an imperative now around payment types. Over the last 2 years alone a dozen new payment methods have hit our options list, from credit and debit cards, to Apple Pay, loan-based e-wallets and crypto currencies. It would be crazy to suggest you need to play in all payment methods, but it is key to understand your target audience and how the pandemic has impacted their lives and disposable incomes.
Subscription services are becoming increasingly popular, with more people opting into subscription models, so this is something that you should weave into your proposition if possible to give your customer even more payment choice.
Make sure you have a good mix of the most common payment types, including PayPal for its perceived security, Klarna for its buy now pay later possibility and the usual credit/debit providers. Also, as the demographic of online shoppers changes, look at reward based credit cards such as American Express and Virgin Atlantic too.
6. Last Delivery Dates for Christmas Shipping
If you are like me you tend to leave your shopping quite late. Why…? Because you can. Carrier services are more sophisticated than ever and if we are lost for time there is always Amazon for that guaranteed next day service. If there is one thing a parent cannot have at Christmas, it is that main present for a child that is ordered in time – but does not arrive for Christmas morning!
With significant pressure on carrier infrastructures this peak, likely well past Black Friday, retailers will need to be 100% confident in customer delivery promises. Once the order has left your warehouse you lose control over the carrier and last mile process, therefore being very careful on setting last dispatch dates for guaranteed Christmas delivery will be crucial to customer satisfaction. You can always push back last order dates, but you cannot bring them forward, stay in control of your end to end customer experience.
7. Customer acquisition for the long term
Lockdown saw a supercharged e-commerce shift in shopping behaviour, with many flagship e-commerce businesses seeing triple digit growth and completely new customer segments and demographics suddenly becoming important at scale almost overnight. Acquisition therefore has arguably never been easier as the demand for online consumerism has surged in 2020. Research from Bizaarvoice has revealed that 74% of UK consumers, across all age groups, are comfortable with online buying due to Covid19, moreover 2/5ths of consumers have actively tried new brands during lockdown, with 88% of those prepared to stick with their new suppliers.
Retailers can delight new and existing customers alike in an unprecedented age for online acquisition. Pushing tested tactics such as personalisation, adding value rather than discounting, sending back in stock notifications, and having a well thought our CRM brand onboarding and communications plan will ensure you maximise the lifetime value of your new online customer.
A new world for everyone
This peak period will be very different for both retailers and consumers alike, even just taking in to account the distance gifting rules above. Throw in stock issues, competitor discounting, extreme weather, and the fact that multichannel retailers in many regions will not be able to fall back on Click & Collect… To use a message from a friend of mine at the sharp end, “Pass me a strong coffee…!”
As for my crystal ball, it has been known to misfire from time to time, but whatever and however you approach peak 2020, if you stress the importance of the e-commerce basics, stay in control of your end to end experience as much as possible, and put yourself in the shoppers mindset, you will be in a great position to capitalise on an e-commerce Christmas that I predict will be 50% bigger than 2019.
If you’d like to speak to us about your peak proposition and planning, please email the team on [email protected].