Holiday Success Recipe: Strategically Target Discounts, Focus on Fulfillment , Amp Up Agility

The 2020 holiday season will be dominated by uncertainty, a sharp contrast to the relatively steady growth in spending and ecommerce traffic that retailers enjoyed over the past several years. Retailers will have to forge ahead without reliable historic data to guide them — but looking at the events of the past six months and results from recent surveys can help center their perspective.

“This is truly an unprecedented challenge for retailers, much like the rest of the year has been for society in general,” said Brooks Kitchel, Head of Retail Strategy at Accenture Strategy in an interview with Retail TouchPoints. “I don’t think retailers have ever seen this mix of health, economic and social disruption that we’re experiencing today.”

Some of the major challenges retailers will face this year include:

  • Winning wallets no matter the size: Surveys vary on whether spending will grow or shrink this year, but one thing remains certain — great deals are a good way to attract stressed-out customers;
  • Keeping up with ecommerce demand: Online shopping has exploded during the pandemic, and the holiday season will be no exception — but retailers won’t have any excuses if this leads to shipping delays on time-sensitive gifts;
  • Understanding how small businesses can thrive: Shoppers are very interested in helping their local businesses get through these tough times, which has created new opportunities for smaller retailers; and
  • Staying agile in the face of adversity: Projections are valuable, but the chaotic nature of the coming months means that retailers need to be prepared to respond to any unexpected events that appear.

Uncertain Wallet Sizes Create Fierce Competition

Pricing may be more important than ever during the 2020 holiday season: 82% of shoppers say this is the most significant factor that influences their purchase decisions, according to data from Feedvisor. Additionally, 50% of Americans noted that their holiday spend has been impacted by coronavirus, according to Bazaarvoice.


However, the data has been split on just how this will affect the holidays. Deloitte predicts an average holiday sales increase of between 1% and 1.5%, but these numbers alone don’t tell the whole story. The firm sees two potential paths: a relatively stagnant year-over-year sales increase of 0% to 1%, held back by anxiety and concern among shoppers, or a more significant jump of 2.5% to 3.5% if a vaccine or other relief emerges.

This bifurcation is supported by other surveys, which saw variable responses. Some surveys report that spending will remain flat, and even decrease, for many shoppers compared to 2019:

  • 44% of consumers plan to spend the same amount as last year, and 41% expect to spend less — nearly triple the number from 2019, according to Accenture;
  • 39% of respondents plan to spend less on their holiday shopping this year compared to last year, according to Glassbox.

Other surveys concluded that shoppers are actually spending more despite the recent uncertainty:

  • 73% of shoppers say spending levels will either stay the same or increase this year despite market conditions, according to PowerReviews; and
  • 81.3% of consumers said that they plan to spend about the same or more on holiday gifts compared to 2019 — the highest level recorded by Tinuiti in the past three years.

Even some overall positive news can be mixed: 76% of shoppers still plan to spend the same or more, but that share is down from 85% in 2019, according to AlixPartners.

Maintaining sales in this uncertain environment will be about offering the right deals on the right products rather than sticking to the standard holiday script or focusing on deep, deep discounts. Regardless of whether shoppers are cutting back, they still want to feel like they are splurging.

“I think everyone is looking for a little sparkle this year,” said Alexa Driansky, SVP in the Retail Practice at AlixPartners in an interview with Retail TouchPoints. “Just because consumers are looking to spend less doesn’t mean they are cutting out spending completely. Retailers ensuring that they have really great offers on selected items in order to draw consumers in is what will be key to appealing to consumers who are looking to spend less.

Massive Ecommerce Demand Contributing to a Longer Season

Prior to the pandemic, holiday 2020 ecommerce sales were expected to increase 13%, to $155.5 billion, according to data from the Retail Practice at Berkeley Research Group. Record ecommerce volumes generated in Q2 and Q3 caused that projection to balloon to 45% for an anticipated total of $200 billion. Additionally, a survey by Visa found that 52% of consumers plan to do half or more of their shopping online this season.

Heavy delivery demand has led to delays and dissatisfied customers in the past, and 56% of respondents said they won’t shop with a retailer again after an unsatisfactory delivery experience, according to Accenture. However, the pandemic and associated economic uncertainty has also made the traditional November-December holiday season “meaningless” this year, according to AlixPartners.

Black Friday was already losing steam as the year’s biggest shopping holiday, and the trend has only accelerated this year. A majority of shoppers are less interested in shopping on Black Friday (64%) and Cyber Monday (59%) than they were a few years ago, according to Accenture. Major retailers are already spreading their Black Friday deals across November, which could ease some of the pressure of fulfilling holiday shipments.

“The more you can flatten the demand curve, the better off you’re going to be,” said Kitchel. “There are always going to be huge spikes, but being able to utilize technology to sense where demand is going to be, and put inventory in the right place so that you can avoid split shipments and make the flow of goods to the consumer smoother, will be the key to success.”

Small Retailers Should Emphasize Digital and Support Social Justice

The uncertain atmosphere is causing shoppers to rally in support their communities: 24% of consumers will try to support local businesses/retailers when holiday shopping, according to Visa. However, smaller players are still operating under the constraints of the pandemic, and need to plan accordingly if they want to make the most of the opportunity.

“Due to the uncertainty of what COVID-19 restrictions may still be in effect during the holiday season, shoppers are leaning toward gifts that give the recipient more flexibility in their use, like digital gift cards,” said Alex Burgin, VP, Head of Authorize.Net at Visa in an interview with Retail TouchPoints. “For SMBs, this provides a way to maintain sales with or without in-person shopping, while giving business owners a chance to get on level footing with some of the larger retailers as consumers can meet your business online.”

Visa also found that 20% of U.S. SMBs are digitizing parts of their operations, 20% are investing more in physical infrastructure and 24% expect to extend business hours to prepare for the rush.

Additionally, small retailers, just like their larger counterparts, need to be aware of the benefits of strong corporate messaging and responsibility. One particular point of interest this holiday season will be the Black Lives Matter movement:

  • 21% of shoppers will specifically frequent Black-owned businesses or brands that have expressed support for the Black Lives Matter movement, according to Tinuiti; and
  • 40% of respondents plan to support and shop at minority-owned businesses, and 39% said they will shop with retailers that support the Black Lives Matter movement, according to Accenture.

Agility Offers a Solution to Uncertainty

The uncertainty of the 2020 holiday season makes it difficult to create a single roadmap to success, but there is one virtue that will benefit everyone this year: agility. With so many sales at stake, retailers need to become more responsive than ever to make up for the difficult start to the year and to position themselves for 2021.

Preparing for any possible scenario calls for breaking down silos across the organization, accelerating insights from data and embracing speed, according to AlixPartner’s Driansky. Together, these behaviors can drive performance, profitability and resiliency even in the most chaotic environment.

“This year we’ve been hit with the destruction of so much and so many unknowns,” said Driansky. “Retailers have had to deal with the disruption of the coronavirus, and then from a consumer standpoint, economic and political uncertainty. I want to reinforce the fact that retailers really need to focus on agility, and that will help them face unprecedented times.”

Featured Event

Join the retail community as we come together for three days of strategic sessions, meaningful off-site networking events and interactive learning experiences.



Access The Media Kit


Access Our Editorial Calendar

If you are downloading this on behalf of a client, please provide the company name and website information below: