What’s the Story?

The 2020 holiday retail shopping season is not going to be business as usual. The year started off with trade tensions, followed by Covid-19 lockdowns and gradual store reopenings. Consumers have become cautious about in-store shopping, instead preferring to avoid public places and crowds and take advantage of contact-light fulfillment options. Coresight Research’s latest weekly surveys of US consumers show that nearly 60% of consumers remain reluctant to enter stores and visit malls. Some changed behaviors are likely to continue, with major implications for the holiday shopping season. In this report—the final of our four-part series—we look the impact of the coronavirus crisis on the start of the holiday season and consumer attitudes to sustainability.

Why It Matters

The holiday retail season is the most important selling season of the year, typically signified by the turning point of “Black Friday,” when retailers become profitable for the year. In 2020, with many retailers losing several months’ revenue due to forced store closures, in addition to the current challenging retail environment—with sales down significantly year over year—the holiday retail season is likely to be even more essential for many retailers’ survival. There remain a large number of variables—encompassing when consumers will begin their shopping and how they intend to shop—that will be key for retailers this holiday season.

Our Questions for the Holidays: In Detail

1.  How does the shift of Amazon’s Prime Day from July to October impact the holiday selling season? Amazon’s Prime Day moving from July to October reflects the impact of the Covid-19 crisis on the supply chain.Amazon had to postpone the annual shopping event by four months (although the date is yet to be determined). Reflecting the disruptions and challenges around product availability and delivery, Target has recommended that consumers do their shopping in October; early shopping will provide consumers with the assurance that they can purchase their preferred items. Amid so much uncertainty, we believe that consumers will opt to “control the controllable” and embrace early shopping to ensure delivery before the holidays. The expected earlier surge in holiday shopping may be compounded by the later Prime Day date in October. This will likely advance holiday shopping and could kickstart early momentum as consumers aim to combat slower supply chains and delivery times. A proprietary Coresight Research survey of US consumers conducted on August 12, 2020 found that 22.7% of respondents expect to start their holiday shopping earlier in 2020 than they did last year. This year is likely to see a reversal of just-in-time shopper behavior due to the experience of stockouts during the start of the coronavirus outbreak in the US in March. The crisis has also broadly changed other consumer behavior through the implementation of social-distancing measures, the adoption of online shopping and the need to wear masks in public. To drive sales, retailers should encourage an earlier start to the holiday season that maintains safe distancing while affording access to popular gifting items; they could employ this tactic through messaging, gamification and exclusive limited-edition product flow. 2.  Will holiday shopping be primarily completed curbside or at a BOPIS counter? During the spring and early summer, many retailers began offering BOPIS and curbside pickup while consumers were unable to enter physical stores. These pickup options remain highly popular, as many consumers are still reluctant to enter stores despite their reopening. As of the most recent Coresight Research weekly survey, conducted August 26, 57.6% of US consumers are currently avoiding shopping centers and malls, and 44.2% are avoiding shops in general (although these figures have modestly declined over the past four surveys). This means that physical retail events such as Black Friday, which usually see massive crowds storming retailers, may not have the same impact if consumers remain skittish about entering physical stores. Our August 12 survey revealed that more consumers expect to embrace contact-light options for holiday shopping, with almost three in 10 expecting to use curbside pickup services for some of their online purchases—and 23.2% planning to use in-store pickup services. Retailers will have to offer alternative pickup options such as delivery, BOPIS and curbside pickup to align with consumer demand if this sentiment continues into the holiday season. This becomes more of a challenge as the autumn weather cools, but retailers could find creative solutions suited to the seasons, such as heated tents. Target and other large retailers have announced that they will be closed on Thanksgiving Day, eliminating the possibility of crowds on Thanksgiving—and, as previously mentioned, Target specifically encouraged its customers to start shopping in October, when the weather is less cold than in November. 3.  Will 2020 be a green Christmas? A substantial proportion of US consumers became more focused on sustainability in their shopping journey due to Covid-19, according to our August 26 survey. Some 29% of respondents said that the pandemic has made environmental sustainability more of a factor for them when shopping, citing reasons such as changing priorities and lockdown indicating the potential for rapid change. We think that this heightened awareness will remain as consumers begin their holiday shopping in 2020. We asked consumers what they consider to be the most important sustainability issues for retailers, and reducing plastics took the lead. Packaging is a huge concern for consumers in terms of sustainability: Making packaging biodegradable, recyclable or reusable was ranked the second-most important sustainability action for retailers, followed by reducing packaging. Consumers also expect retailers to use recycled materials, not just in packaging but also in new products. Brands and retailers have certainly noticed shoppers’ growing interest in sustainability in packaging, products and the supply chain—recognizing too that more efficient operations may lead to reduced costs in the supply chain. Furthermore, the increasing desire from consumers to shop at sustainable brands may give room for improved sales. Holiday 2020 could be the return of the homemade gift—bought from an artisan on Etsy and benefiting the small businesses that have been devastated by the crisis, as well as gifts of freshly baked bread, cookies and cakes, and handmade candies and knitwear. This year, consumers and retailers may become more inventive in product selections, given supply constraints and social distancing.

What We Think

Implications for Brands/Retailers

• It is important that brands and retailers stay flexible and entrepreneurial to handle possibilities such as an early shopping surge, higher e-commerce shopping and consumers seeking alternative delivery options.
• Packaging is easy to change and addresses concerns for sustainable alternatives. Retailers and brands would be wise to adopt sustainable practices where feasible—and develop a sustainability strategy if they do not have one. This should also be communicated to consumers.

Implications for Technology Vendors

• Technology vendors can assist retailers to fine-tune their supply chain management tools to adapt and handle unexpected changes in the pandemic outlook, as well as different consumer demand patterns.