woman doing holiday shopping online
With many consumers planning to do their holiday shopping mostly online this year, retailers are tackling online consumer engagement and preparing for supply and shipping demands. — Getty Images/Geber86

Retailers are gearing up for their most important time of the year, and it will be unlike any other holiday season they’ve ever experienced.

Consumer surveys show Americans are still planning to do holiday shopping this year, but when and where they shop and what they buy will be very different, retail experts told CO—.

Holiday shopping will start a lot earlier

Retailers are rolling out their biggest discounts in mid-October instead of on Black Friday, to compete with Amazon’s two-day Prime Day event October 13 to 14.

Deal-finder website RetailMeNot is predicting that the October Prime Day promotions will be the biggest spending event of the holiday season, followed by Cyber Monday, with Black Friday landing in third place.

A RetailMeNot survey found that close to 40% of shoppers plan to buy early not just for bargains, but because they are worried about not being able to get the gifts they want if they wait.

Solving for shipping and supply chain issues

With the surge in online shopping triggered by the pandemic, warehouses and delivery companies are operating at capacity and having trouble meeting demand. That pressure will accelerate as holiday orders begin, Frank Poore, founder and CEO of e-commerce enablement platform CommerceHub told CO—.

While out-of-stock inventory is likely, Poore said, “My sense is the bigger problem will be delivery problems, either because of warehouses that are at full capacity,” or due to overtaxed providers like FedEx, UPS and the postal service challenged to meet increased demand.

To counter that issue, retailers that CommerceHub works with are seeking to stagger demand with early promotions. “They want to start selling now, while there’s still capacity in the supply chain,” Poore said.

The silver lining for retailers may be that shoppers who can’t go to holiday parties or travel will spend more on gifts like sweaters, jewelry or toys.

Stores need to connect with shoppers online

A study by customer engagement platform Iterable found that 67% of shoppers plan to do more or all of their shopping online this year, while only 3% of shoppers said they would do all their shopping in stores.

That’s a dramatic change from last year, when the National Retail Federation’s holiday survey found that more than half of the shoppers surveyed planned to do a significant amount of their holiday shopping in department stores and discount stores.

This year more than ever, retailers need to think about how they engage with those online shoppers, Jeff Samuels, chief operating officer of Iterable, told CO—. More than 80% of those surveyed for the Iterable study said they are more likely to buy from brands that create an emotional connection with them.

Brands need to “think strategically that the person you’re engaging is more than an email address or a phone number or an online profile,” and create personalized messages, Samuels said. Consumers, he said, want to buy from brands that make them feel comforted and supported and that make their lives better.

Experiential gifts aren’t on holiday wish lists

Pre-pandemic, the fastest growing holiday gift category was experiences — concert tickets, plane tickets, museum memberships, cooking classes “and everything in between,” said Sara Skirboll, shopping and trends expert for RetailMeNot, in a holiday preview attended by CO—. Those gifts aren’t showing up on any wish lists this year.

Instead, consumers plan to buy practical presents, Skirboll said. “Think work from home, learn from home, work out from home — laptop stands, noise cancellation headphones, free weights,” she said.

Stuck-at-home shoppers may spend more on gifts

The silver lining for retailers may be that shoppers who can’t go to holiday parties or travel will spend more on gifts like sweaters, jewelry or toys.

Survey results differ on whether consumers will spend more or less this year. RetailMeNot found that 66% expect to spend as much or more than they did last year, while 58% of those surveyed for Iterable said they plan to spend less.

Retailers, however, are betting Americans will be in a gift-buying mood.

According to RetailMeNot, 86% of retailers are planning for holiday shoppers to spend more than in 2019, and 88% are optimistic that they will outperform their 2019 holiday results.

“There’s a lot of optimism right now from retailers,” said Lauren Cooley, senior vice presider of retailer and brand solutions for RetailMeNot.

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Published October 14, 2020