With summer delivering a back-to-school season like no other and fall quickly approaching, many brands and retailers hope holiday sales can mend a year decimated by the coronavirus pandemic. But retail’s path to a successful November-December season is littered with more than a few obstacles this time around.
Sourcing Journal caught up with Jake Cohen, head of product at marketing automation platform Klaviyo, to learn how Labor Day Weekend can clue retail into an outlook for holiday and why fulfillment will take center stage in the season ahead.
Sourcing Journal: Labor Day Weekend often augurs what lies ahead for holiday retail. What can the industry expect this year?
Jake Cohen: This year has seen a tremendous uptick in online e-commerce sales, which will continue to ascend this Holiday season. We will be seeing a massive continued e-commerce push among retail spending, but it will be spread out, lagged, and stores will see much lower foot traffic on Black Friday. Because of the election, retailers are also forced to compete for online advertising space, thus they will be promoting sales and events earlier this year (in September and October), versus going hard this November. Overall, the timeline has shifted, and we won’t see the same consolidated spending over two days. We’re confident Holiday sales and specials will happen a lot earlier to spread out demand and “capture” the consumers’ wallet early on.
SJ: With e-commerce emerging as 2020’s big winner, what’s in store for delivery and logistics and how can digital retailers adapt accordingly?
JC: Delivery and logistics is predicted to have a difficult Holiday season. Since the pandemic began, retailers have been slammed by customers for issues with fulfillment, shipping delays, lost packages, and erroneous delivery estimates. Additionally, fulfillment has done a poor job with providing data back to the brand, which the brand then struggles to communicate to the customer. For this Holiday already, UPS and FedEx are telling retailers they are going to implement shipping surcharges, which is going to either place the added cost onto the retailer or consumer. Therefore, we will see plenty of retailers moving to issue a purchase threshold to validate their cost of shipping.
SJ: Please mention how “sold out” will potentially become the season’s biggest tagline. Can you elaborate?
JC: This Holiday season, the scarcity tactic of “sold out” will likely hold, a byproduct of difficulties associated with sourcing inventory and savvy marketing by retailers. This will give shoppers a sense of urgency, especially as inventory is running lower than usual, and will be used to influence shoppers to get their shopping done earlier.
SJ: Curbside and BOPIS have already taken hold on the consumer front. How might holiday further evolve omnichannel behaviors?
JC: The coming Holidays will likely continue to accelerate curbside and BOPIS trends in numerous ways. First, Covid-19 has conditioned the consumer to source inventory in non-traditional and largely digitally enabled ways, likely challenging the prevalence of retail modalities as we once knew them. Stores lagging in the digital infrastructure will really be pushed to deploy the BOPIS method. Consumers will likely shy away from the prospect of large crowds as they don’t want to wait in lines, but they still don’t want to risk ordering online for fulfillment issues. Sadly, retailers that aren’t offering BOPIS will likely face difficulties.
SJ: Retailers have discussed elongating the holiday sales season. Do you see a consumer appetite to start their spending earlier than usual?
JC: Yes, consumer spending will start much earlier this season. Consumers will be buying both ways before and after the Holiday season, as stores largely limit foot traffic. Because retailers usually order 6 months in advance, November inventory will be based on more limited purchases made from this past May, when the brands were facing fewer sales and cash shortages. Q3 and Q4 will really feel the effects of Covid-19, where purchases made in May will dictate shortages through the rest of the year. Additionally, consumers are aware fulfillment will be strained, so they will prefer to get their orders done early to guarantee the right item and size, and will have the peace of mind of getting there before the Holidays.
SJ: Which digitally native brands do you believe are poised to succeed this holiday, and why?
JC: While digitally native brands have performed strongly of late, particular types are expected to flourish more than others. These include more niche products, especially those that cater to enthusiasts of particular activities or items. Examples include everything from skincare to guitars. Notably, new consumers aka “first time customers” are seeking out these items. From February of this year to April alone, Klaviyo clients experienced a profound spike (+87%) in sales, the overwhelming majority of which were first-time purchasers. Additionally, Google’s algorithm is conditioned to favorably surface these niche brands, and with extra time on their hands, consumers are willing to try something new.