Holiday Season Kickoff Reveals Permanent Shifts in Consumer Preferences

Laveta Brigham

As the dust settles on this past holiday shopping weekend, it’s clear that Black Friday is now just another day of the week as industry experts note that consumers have been shopping for holiday deals — online — since October. Primed by Amazon Prime Day, “Black Friday” promotions by Target […]

As the dust settles on this past holiday shopping weekend, it’s clear that Black Friday is now just another day of the week as industry experts note that consumers have been shopping for holiday deals — online — since October.

Primed by Amazon Prime Day, “Black Friday” promotions by Target Corp. and Walmart Inc. and then Singles’ Day in early November, consumers have won the day. Moreover, the shift toward online shopping is likely to remain a prominent consumer preference. Analysts expect the share of online sales to exceed 30 percent this year, which compares to about 14 percent last year.

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In a report by Pitney Bowes and Morning Consult, researchers said “online shopping habits expedited by the pandemic are here to stay this holiday season.” The authors of the report said, generally, “more than half of consumers (54 percent) shop online more often today versus pre-pandemic, and this is a trend we’re seeing continue into the holiday season as well.” Another twist this year is the generational impact of online shopping. The preference cuts across Baby Boomers, Gen X and Millennials.

“Unlike in other years, where holiday shopping skewed in-store across generations, this year, shopping skews online, with 58 percent of adults planning to do their holiday shopping online,” the report noted.

In regard to shopping device preferences, mobile is on fire. Data from Adobe Analytics showed that “online sales via smartphones hit a new record, accounting for 36.3 percent of Cyber Monday sales so far, a 12 percent increase compared to last year’s Cyber Monday.” Adobe also noted that social media is driving consumers to retailer web sites more so than in other years.

In a weekend holiday recap interview with WWD, Sonia Lapinsky, managing director in the retail practice at AlixPartners LLP, said it was important to recognize that consumers have been shopping digitally since the spring — at the full onset of the COVID-19 pandemic. “And what we’ve been seeing and saying is that everyone’s been shopping for holidays since October,” Lapinsky said. “So, the fact that we’ve been waiting and looking for some big ‘eureka!’ moment and a big boom on Black Friday, it’s nothing. It’s a nonevent this year. And not only is Black Friday a nonevent, but the holidays are also a nonevent, because, again, our consumer is now trained 100 percent to sit at home, on their couch and shop online.”

For this past Black Friday, shoppers have been hunting for deals for some time and that has distorted the holiday shopping season, which Lapinsky said “has been blended together and pulled forward.”

Lapinsky said to gauge anything meaningful, holiday sales should be examined over a three-month period; October, November and December. From that point of view, Black Friday is just a blip.

“This year, more than ever, we dubbed it ‘Bleak Friday,’ not Black Friday,” she told WWD. “I don’t know if you were at the stores at all, but there was nobody out there. There was no traffic. Stores were pretty desolate, partially because everyone was shopping online and had been already shopping online.”

The question then arises: Is the shift toward more online sales enough to make up for all the shortfalls in traffic? Lapinsky is doubtful. Meanwhile, the clock is also ticking on gift buying online.

“We’ve got probably another week or two weeks’ maximum of real final holiday shopping because if we’re all shopping online and we don’t get it done in the next week or so, then the next big catastrophe is that nobody’s going to get products shipped in time, or they’re going to be paying triple for their products to have it shipped,” Lapinsky said.

Rob Garf, vice president of strategy and insights at Salesforce, said as retailers “were forced to cut back hours and traffic in physical stores for safety, the industry experienced an unprecedented surge in digital sales over Cyber Week. As we edge toward winter holidays, retailers will be faced with the challenge of ‘shippageddon’ and delivering an onslaught of digital orders over the next few weeks.”

Meanwhile, the shift to online is eroding other consumer spending behaviors, Lapinsky noted. “We’re going to lose that whole last-minute Christmas shopping that we used to have when everybody rushes out to the stores in the last week or so — spending way more than they would normally have spent,” she said. “All of that is probably gone out the window because we’re now shopping online.”

Loss of that consumer behavior trait in-store impacts categories differently. Fashion apparel and accessories, for example, tend to benefit from last-minute shopping impulses. Indeed, the pandemic has already been particularly hard on apparel, which is expected to struggle through the holiday shopping season, according to Craig R. Johnson, president of Customer Growth Partners.

Johnson said it’s been a “hardlines holiday” with consumer electronics and appliances garnering the most dollars. In regard to digital sales, he said it will “continue to expand at a strong double-digit pace, far outpacing other categories, and comprising almost 70 percent of the aggregate increase in holiday sales.” Johnson has the holiday shopping season pegged to deliver a robust 5.8 percent gain.

For traditional retailers that have not made investments in digitalization, this season will prove to be especially challenging.

Lapinsky said the companies that are winning are the ones that have made “big investments in digital, in infrastructure, in curbside pickup, in connecting with their consumer and making sure they have the product available where they want to pick it up or how they want to shop.”

“There are many retailers that didn’t make those investments early and before COVID-19, and they’re definitely feeling the impact of it,” she explained. “Many of the same retailers who didn’t make the investment are the ones that were more hurt from the pandemic, because they were shut down or not deemed essential or because they’re in malls and nobody wants to go to the mall, they don’t have a good enough online presence. It’s very grim for many retailers out there.”

Is there hope for physical retail? Yes, according to Liad Agmon, chief executive officer of experience optimization platform Dynamic Yield. Agmon’s company said “brands can begin to restore value to physical retail stores by delivering more in-store digital experiences and by giving customers new, exciting non-transactional reasons to visit a store.”

Examples include leveraging data to identify customers and then “provide them with personalized experiences as they enter a store.” It also means “redesigning store layouts to incorporate interactive elements for customers to engage with.” Agmon said the future of physical retail “relies on delivering unique experiences to make visiting stores more attractive than ever before.”

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