Ecommerce sales to explode this holiday season, putting retailers’ online strategies to the test

As we wait for the National Retail Federation’s retail forecast – which will come any day – Deloitte and Forrester have released their forecast for the 2020 holidays and year-end.

The Big Four accounting firm Deloitte has a “half-full glass” view, expecting holiday retail sales to increase between 1% and 1.5%. On the flip side, market research firm Forrester looks and sees the glass half empty, with retail sales down 2.5% for the entire year.

Despite their differing predictions, the two companies are firm on one thing: this will be the year online shopping explodes.

Unconventional online growth

Forrester sees online retail growth grow 18.5% this year, reaching 20.2% overall penetration in North America.

Retailer online sales in popular gift categories will be boosted this season, with health and beauty up 23%, consumer electronics 20%, fashion 19% and 16% higher for furnishings at the end of the year.

On the other hand, in-store retail performance in these categories will drop – offline health and beauty sales down 8.2%, home furnishings down 15.2%, consumer electronics down 26.3% and in-store fashion sales 33.7%.

“While online shoppers behavior remains strong, we expect offline sales to decline 6.6% in 2020,” Forrester reports.

The more optimistic Deloitte predicts that e-commerce retail sales for the holidays will increase 25% to 35% from November to January, reaching $ 182 billion to $ 196 billion in total.

“When we did the forecast, it turned out to be better than I expected,” says Rod Sides, vice president of Deloitte and US leader in retail and distribution. As he explains, “We had a strong back-to-school period which increased by around 2% and consumer savings rates increased significantly, which is one of the key metrics that go into this. our economic forecasts. “

Vacation at home

Much of that increased savings has come as consumers forgo travel, vacations and dining experiences during the pandemic, leaving them with “a little bit of dry powder” to spend as the holidays approach, Sides shares.

With the uncertain state of Covid infection rates, consumers will continue to forgo many vacation trips and family and friend reunions, with people offering more freebies to replace time spent apart.

And with fewer parties to attend and more time spent at home, Sides is seeing more self-shopping geared towards home improvement and decorating. Eager to celebrate the ‘Ho-Ho-Ho’ Holidays after what we’ve all been through this year, consumers will splurge on new outdoor, indoor and Christmas tree decorations, expect. he.

“If I don’t go out, those dollars have to go somewhere and a lot of it will go home,” Sides said.

And all that time spent at home will bring a lot more online shopping. “Over the past four years, e-commerce growth has increased on average from 13% to 17%, and last year it increased by 14.7%. This year it will become ballistic, somewhere around 25% and it could go higher, ”he said.

A new survey conducted by Dynata for Redpoint Global, a software company providing omnichannel support to retailers, adds ammunition to this explosive forecast of e-commerce.

This study found that almost two-thirds of the 1,000 adult shoppers surveyed (62%) planned to do all of their vacation shopping online.

Another recent survey by GfK Consumer Pulse found that fewer shoppers (42%) plan to buy exclusively online. But regardless of the actual number, retailers can expect a lot less foot traffic to their stores and a lot more online traffic to their websites.

Growing pressure on the retail supply chain

This will put enormous pressure on retailers as they have to move resources out of stores to fulfillment centers to fulfill a surprisingly large number of orders.

“As online sales reach historic highs, retailers will feel significant pressure on their margins in 2020 as e-commerce logistics costs drive up costs for retailers,” Forrester said. “As online shopping trends remain strong over the next five years, retailers will need to strike a balance to help ease this pressure on margins. ”

One of those pressure points that needs to be relieved is the lack of transparency about out-of-stock products and potential shipping delays, reports John Nash, director of marketing and strategy at Redpoint. This is one of the biggest frustrations for online shoppers and many will likely be frustrated this holiday season.

“The physical supply chain may not be able to handle the flow of orders and make those deliveries,” says Deloitte’s Sides. “Retailers have developed more capacity for that last mile, including online shopping-in-store pickup, but this year is going to be a stress test for the retail supply chain. “

Customers demand personalized engagement

Another pressure point that retailers must alleviate is the cost of ineffective online marketing. Most retailers are stunned when they calculate the true cost of converting a cheap digital lead into a paying customer.

Redpoint’s Nash says retailers have a solution to this problem if they use consumer data that is readily available to personalize their online marketing and customer engagement processes.

“Retailers are failing to meet customer expectations for personalized omnichannel experiences,” he shares, saying more than 70% of consumers polled by Harris Poll for his business last year reported a personalization gap .

And it continues today, as consumers’ expectations for more personalized engagement, both online and in-store, are dashed.

Among their biggest sources of frustration are retailers who send out offers for a recently purchased item (34% found it very frustrating), send irrelevant offers (33%), and don’t recognize them as existing customers ( 31%).

Personalizing the customer experience so that their inboxes are not flooded with indiscriminate messages pays off. Almost half of consumers (49%) say they’re more likely to buy from retailers who send them personalized content and offers this holiday season.

Such personalized communications prove that the business understands the individual customer, and doesn’t just bundle them with a bunch of others on the basis of some arbitrary data point.

“Retailers need to incorporate all available data about the individual customer, not just past transactions, response data to previous emails or demographics,” advises Nash.

“They should overlay that with other behavioral data, attitude data and survey information. And that customer information needs to be activated at every point of contact with the customer, whether they are shopping on the website. , in store, via a mobile application or by joining a call center, ”he continues.

Included customers are loyal customers

There is a basic human need that needs to be understood and people bring that same need into their dealings with retailers and brands. Retailers who demonstrate a genuine understanding of each customer will be rewarded.

Some 70% of people polled by Redpoint about their holiday shopping plans said they would buy exclusively from retailers and brands who understand them personally.

“What’s critical is that retailers deliver relevant messages and offers the very moment they show up,” Nash says, adding that this is a big demand for retailers, but to which they better start answering.

“There are a lot of operational complexities in trying to match customer cadence with your daily business cadence,” he concludes. “But with the right, relevant customer data available across the organization, you’ll be able to deliver personalized messages and offers to them, so customers get what they want, when they want it. Retailers that do this will be more successful at securing consumer spending during the holiday season. ”

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