The Impact of Consumer Sentiment on Holiday Retailing During a Pandemic

Article
by Peter McCall on 10-23-20

Shoppers visiting stores for non-essential items came to a screeching halt in the early weeks of the pandemic. Then, as late spring arrived, retailers began cautiously reopening and in-store traffic began to steadily improve. At the beginning of the reopening period, consumers expressed a high degree of concern about returning to in-store shopping. Our first consumer sentiment survey, conducted at the end of April, told us 59% of shoppers were moderately or very concerned about shopping in-store. As the summer wore on, we witnessed incremental improvements in traffic.   In fact, our weekly traffic report shows retail traffic improved from down -83% in mid-April to down roughly -25% by the end of September. However, these improvements don’t correlate with changes in the consumer’s level of concern.

Our most recent survey, conducted in September, showed that 65% of consumers were concerned or very concerned about shopping in-store, a 6-point increase in concern compared to our first survey. Shoppers remain anxious, yet continue to visit stores with increasing frequency. Understanding this, how will consumer sentiment shape the upcoming holiday season? What are the key questions retailers should be asking themselves as they prepare for the upcoming holiday season?


What’s Motivating Pandemic Fatigued Shoppers this Season?

In a year dominated by the effects of a pandemic, there have been few constants in the way we think about operating stores. One exception has been the motivations of the in-store shopper. Similar to what we’ve seen over the last few years, consumers are visiting stores for reasons that can’t be easily replicated online: product related reasons. We found a combined 77% of survey respondents were motivated to visit stores to physically touch or feel the product, as well as browsing for gift giving inspiration.  To this end, the visual presentation and the availability of product will be this year’s key to success for brick and mortar.

The results of our survey revealed three traditional categories at the top of people’s gift lists: apparel (65% of respondents), electronics (51%), and toys, books & other media (44%). We see this as especially good news for the apparel and electronics retailers considering they both struggled throughout the summer, down 23% and 9% respectively according to the U.S. Census Bureau’s Retail Trade Survey. The survey results uncovered a shift within the sporting goods category. Since the beginning of the pandemic, the sporting goods category was set ablaze throughout the summer months, up 17% to the same period in 2019. Surprisingly, only 11% of respondents included sporting goods a top spending category this upcoming holiday season.

When Do we Expect the Holiday Spending Season to Begin?

“Holiday Shopping Creep!” sounds like a headline from recent holiday seasons. As owners of the largest global retail traffic database (over 40 billion counts per year), our previous year’s research fails to support this hypothesis. We do, however, expect this year’s holiday gift giving season to begin earlier than ever before.

Seventy-four percent of respondents indicated they will have started purchasing gifts for this holiday season before the end of November. It also shouldn’t go unnoticed that 43% of respondents suggested they began buying by the end of October.  To help put this in context, just two years ago a similar survey found only 22% of consumers began shopping for gifts before November.  That being said, mentions of this year’s early start shouldn’t be considered groundbreaking. Further evidence of the early start can been seen throughout the industry. There have been two pronounced efforts in support of an early start. The National Retail Federation recently launched their, “Shop Safe, Shop Early” campaign. The second is a well-coordinated effort by many to create a new official start to the holiday season, the 10.10 Shopping Festival. A compounding factor is Amazon’s Prime Day moving from mid-July to October 13th and 14th. It remains to be seen if any of these campaigns receive the traction they intend to gain. Regardless, the promotion of an early start is a shrewd decision knowing the upcoming season will be negatively impacted by the pandemic.

An early start benefits the retailer in a number of ways. Just a few include:

  • Less stress on the supply chain and logistics during traditionally peak periods
  • An opportunity to gain market share thru early promotions
  • Fewer temporary hiring requirements due to a flattening out of traffic peaks
  • Messaging to their customers and associates that they are prioritizing the health of others

By checking-off items from their gift list, the shopper benefits as well. Here’s how:

  • Stores will be less crowded and easier to navigate during traditionally peak periods
  • Shopping in an environment that is presumably more healthy
  • Securing the perfect gift before it is gone
  • More time to spend with immediate family during the holiday season

With all of the supporting evidence of an early start to the season, what does this mean for Black Friday? It’s safe to assume there will be less foot traffic this year compared to any previous year. This doesn’t necessarily translate to gloom and doom for this important weekend. The shoppers surveyed haven’t completely written off the possibility of shopping what weekend:  54% of respondents indicated they do not plan to shop stores that weekend (59% indicated they shopped in 2019) leaving 29% planning to shop Black Friday Weekend. What’s most interesting is 16% of those surveyed remain undecided. If the majority of the 16% decide to visit stores, we’re very close to 2019 numbers where we saw 41% of respondents indicate they shopped Black Friday Weekend in 2019.

What Kind of Experience are Shoppers Expecting Upon Arrival?

As written about in a previous blog, experiential retail took a back seat to an operating model heavily influenced by the pandemic. We have learned a lot since that post about the shopper’s expectations for the in-store experience, and it is safe to assume the basics of that operating model remain in place.   Throughout our survey series, the holiday survey included, there has been one consistent message as it relates to a successful in-store shopping experience.

The in-store customer is demanding a visit that by all impressions supports the safest possible experience. The shopper’s pursuit of a safe store includes everything from store type to the check-out experience. Let’s look at some of the finer details.

Respondents in every survey indicated store cleanliness is the most important factor when deciding where to shop. Similarly, consumers are showing a clear preference for retailers following local or state regulations related to occupancy control. In fact, 33% of the respondents indicated occupancy controls are one of the top ways retailers can ensure customer safety through social distancing is a top priority. It also shouldn’t go unnoticed that 56% of shoppers signaled an unlikeliness to shop with a retailer that doesn’t offer a contactless checkout or some type of barrier between themselves and the store associate when paying. Finally, 77% of shoppers prefer to shop in a free-standing store or open-air center, compared to enclosed malls or outlets.

Successful retailers have always insisted the voice of the customer is the central tenant of their business strategy. After all, in the late 19th century it was iconic retailer Marshall Field that coined the phrase, “Give the lady what she wants.” I trust Mr. Field would agree, when you understand the customer’s motivation to shop and are able to deliver the expected experience you’ve found the winner’s secret.   Even in a year like 2020 the winner’s secret doesn’t change. Customers are shopping earlier than ever, visiting stores to experience the merchandise in ways that cannot online and expect retailers to ensure their safety is priority #1. Incorporate this thinking into your holiday execution strategies and I suspect you’ll be making even Marshall Field proud!

Read more posts by Peter McCall