It’s no secret the 2020 holiday season will look a little different for shoppers this year. Although pandemic recovery has increased overall sales recently, it’s critical to look within the industry and prepare in advance for your retail business. This year presented many retail business challenges, but looking ahead will provide support to keep doors open.
How Retail Sales Growth is Changing
According to an article from CNBC, the forecast for holiday retail sales will estimate between $1.147 trillion and $1.152 trillion during the November-to-January time frame, equating to a 1% and 1.5% increase in sales. For reference, in 2019, the overall sales reached a growth of 4.1%.
With the pandemic continuing through the remainder of 2020, retailers must prepare their teams for different scenarios. On one end of the spectrum, consumers are likely to remain nervous about finances. High unemployment and economic anxiety will remain key factors that will affect sales numbers this holiday season. On the other end of the spectrum, there would be a larger increase in overall sales if wealthy consumers feel more confident as we head into the holiday season. According to the CNBC article, some factors that would increase consumer confidence include unemployment reduction, additional government stimulus check, and an effective COVID-19 vaccine.
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Not All Hope is Lost
Despite the uncertainty of how holiday shopping will go, there are some encouraging insights to report. An article from National Retail Federation shared that August retail sales growth and pandemic recovery have continued. This could primarily be due to the positive response from consumers regarding federal relief. Overall, retail spending habits have remained consistent and stable since stores have started opening up, which provides retailers with a positive mindset heading into the holiday season.
Holiday shopping numbers won’t peak this year; however, people will spend money on loved ones when it comes to gift buying. Although consumers may not purchase gifts for coworkers or distant relatives, gifts for close family members and friends will be meaningful and intentional.
Areas currently seeing growth:
Fortunately, there are certain areas where retail sales are on the rise. The National Retail Federation has reported growth from August in the following areas:
- Clothing and clothing accessories show a 2.9% increase
- Furniture and home furnishings show a 2.1% increase
- Building materials and garden supply stores show a 2% increase
- Electronics and appliance stores show an 80% increase
The Biggest Areas of Growth
The pandemic has only made the customer’s need for online shopping stronger. With the trend of the consumers shopping online increasing over the last few years, expect eCommerce sales to surge. Customers will spend less time in physical stores and spend more time clicking “add to cart” while they complete most of their shopping online.
Part of this is due to the advancements with AI-powered product recommendations, which is more relevant as shoppers continue to skip the in-person shopping experience to browse online in the comfort of their homes. AI-powered product recommendations use technology to identify new product-customer relationships. Rather than your team analyzing data, technology will research products, orders, and customer web behavior data, so you don’t have to. Machine learning increases accuracy the more time customers spend online, making the effectiveness predictable. Having this type of technology in place can allow growth in your best products for customers during the holiday shopping season.
Don’t fret, small business owners. Not all customers will be purchasing from digital giants. This year created a massive push for supporting small, local businesses. Specifically, Small Business Saturday has become increasingly popular for consumers to share the local love. The pandemic will have consumers considering local people in their community when making holiday purchases where they can.
How Retailers Can Prepare
Invest in your inventory technology, especially if you offer both in-store and online shopping. There’s nothing more frustrating for customers than when your inventory doesn’t accurately reflect your stock. Integrate your eCommerce channel into your POS to make this process easy for customers to offer stellar customer service.
Developing your customer loyalty program has never been more relevant in the retail industry. As a retail business owner, this provides you with valuable customer data and removes the guesswork for product recommendations to generate more sales. Plus, you’re able to offer more profitable promotions based on customer purchase history, strengthening your relationship with dedicated guests.
Although innovation is vital for business success, sticking to tried-and-true methods are equally successful. Ensure gift cards are an essential piece of your business and marketing plan for the 2020 holiday shopping season. Many customers will send gift cards and certificates to loved ones that don’t live nearby, making them more necessary than ever before since not all families and friends will come together for the holiday season.
More than ever before, the right technology will be significant in supporting retailers as we move into the holiday season. Touch Dynamic offers several solutions to help retailers survive in the midst of a new normal. To ensure your business has the proper technology to navigate the uncharted territory of holiday shopping during a pandemic, contact one of our experts today.