Though 2020 has served up a global pandemic, widespread social upheaval and a contentious election, one issue looms large in the minds of shoppers this holiday season: the state of the economy.
Amid all of the world’s problems, worries about financial security have consumers counting quarters with a bit more exactitude than in years past. According to new survey data from the NPD Group, well over half (57 percent) of shoppers rated the state of the economy as “poor” this year—up 37 percent from 2019. What’s more, nearly one-third (30 percent) said they plan to spend less than they did last holiday season, representing a 23 percent jump from the year prior.
Most respondents, however, don’t feel that their personal finances have changed much since the holidays a year ago, suggesting that anxiety about the future of the economy has them feeling cautious. But tightened purse strings may not spell disaster for retail. According to NPD, shoppers still plan to spend an average of $691 during the holiday shopping season—less than they did in 2019, but on par with what they spent the year before.
And with the massive reduction in travel and time spent together over the holidays, “guilt gifting” is likely to go into overdrive, analysts said, with 40 percent of consumers attempting to buoy loved ones’ spirits by showering them with presents. That spirit of generosity will extend to themselves, too. Almost one-third of respondents said they would be doing more self-gifting as a form of pandemic-driven retail therapy.
While the hottest items include tech and home-related products for bored shoppers looking to entertain themselves or upgrade their dwellings, half of all consumers still plan to buy clothing, footwear and accessories as gifts this year.
Two shopping trends stand to emerge this holiday season that differ from years past, analysts added. The “new holiday period,” has been redefined to run from mid-October—with early promotions like Amazon’s Prime Day and other copycat sales—through mid-January, with shoppers still redeeming holiday gift cards well into the new year. This three-month time frame is expected to see 4.3-5.1 percent sales growth from last year, though 41 percent of shoppers still expect that the Thanksgiving weekend shopping holidays of Black Friday and Cyber Monday will yield the best deals.
Consumers are also, unsurprisingly, expected to spend more online as the second wave of Covid rears its ugly head. More than half (51 percent) said they would switch to making most of their holiday purchases on the web this year because of the crisis. The vast majority (80 percent) of shoppers said they planned to use e-commerce as a tool this season, up 75 percent from 2019.
While online’s dominance is undoubtedly growing, there is still a contingent of shoppers who remains undeterred from shopping in person. On the whole, shoppers plan to make 42 percent of their purchases at brick-and-mortar stores this season.
With two-fifths (42 percent) of gift givers looking to ship their presents across the country, a similar number (41 percent) said that free shipping would influence where they decide to shop—surpassing sale price as the most important consideration this year.
Global e-commerce solution EShopWorld expects to see the trend toward digital accelerate in a big way this season, projecting that cross-border sales made through the platform will increase 63 percent during November and December from the same period in 2019.
Lockdown directives vary regionally, and with countries across the globe wary of another retail shutdown, sales between markets are likely to balloon over the holidays, EShopWorld said. Data from the company indicates projected increases of 56 percent and 70 percent throughout the months of November and December, respectively, as the upcoming peak trading period will be “marked by unparalleled uncertainty.”
“We saw a 113 percent year-over-year increase in global online sales in October, and we’re confident the end of the year will follow the same pattern,” EShopWorld CEO Tommy Kelly said.
“Although consumers began their holiday shopping earlier this year, a predicted increase in sales throughout November and December suggests that the ‘typical’ holiday shopping season will be active, as always,” he added. “We’ve already seen many countries enter a second phase of lockdown, so we can see that the massive shift to online shopping is here to stay.”
While Kelly’s assessment rings true, the marked shift to online commerce—especially during a busy holiday season marked by a pandemic—might not see totally smooth sailing.
New research from Scalefast, which helps businesses strengthen their direct-to-consumer infrastructures, shows that 25 percent of holiday shoppers are stressed about affording the gifts they want to buy, and these concerns could have implications for e-tailers. While e-commerce has emerged as the safest and perhaps most convenient method to shop this season, certain circumstances could deter consumers from making digital purchases.
More than two-fifths (42 percent) of shoppers said they would refrain from making a purchase if free shipping was discontinued or not available. More than one-quarter (29 percent) said that long delivery windows would be a deterrent for them, and 21 percent said they would not buy if they felt that tracking information or visibility into an order’s status was sub-par.
And, because of their economic concerns, more than one-third of shoppers (35 percent) are eschewing their favorite brands and retailers in favor of affordability this season. Amazon’s Prime benefits, like free shipping included with membership, make the platform an incredibly attractive option for 26 percent of shoppers, who said they’d do most of their shopping on the tech titan’s site. Nearly half of survey respondents (46 percent) said they planned to use Amazon because of its guaranteed delivery dates, too.
Shoppers are also concerned about their data privacy heading into the shopping season, as each year seems to see another major retailer getting hacked by online Grinches intent on destroying the holiday spirit. With 14 percent of consumers stressed about the prospect of a data breach, more than one-quarter (26 percent) of survey respondents said that stronger payment security features would make the experience of shopping online less stressful. Twenty percent said being presented with more payment options, like PayPal or other web payment platforms, would alleviate worries.
Despite these tech-based anxieties, shoppers will likely brave the digital realm in their search for gifts for loved ones because the alternative feels more risky. Compared to last year, 22 percent of shoppers said they plan to shop less at physical retail, while 21 percent said they feel less comfortable in stores generally because of health and safety concerns. An equal number of shoppers said they anticipate, or have already experienced, stress due to navigating crowds, while another 20 percent have reservations about the cleanliness of brick-and-mortar stores.