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The recently-released CBRE 2020 U.S. Retail Holiday Trends Report discusses how holiday shopping will be unique (and challenging) this year. Like everything else with the pandemic, holiday shopping will have to shift, both for consumers and retailers. Retailers will need to focus on offering value, convenience, and safety for customers, meeting consumer demands of on-time e-commerce deliveries, more extended promotional periods, and safer shopping options.
For businesses to succeed this holiday season crunch, CBRE recommends retailers partner with dedicated 3PLs to help with fulfillment, freight forwarding, and overall operations. Redwood Logistics has multiple teams dedicated to each function, and we work with you to customize a plan specific to your needs while also taking into consideration the current retail holiday trends.
This year, for a lot of people, it will be less about the “feeling” of the season and more about staying healthy. This means shopping is shifting heavily online and with an extended holiday season to reduce anxieties of crowded stores or delayed shipments. What were the findings of the 2020 Retail Holiday Trends Report by CBRE?
Let’s dive into CBRE’s findings in their retail holiday trends report below.
The most notable number coming from the CBRE 2020 holiday trends report is the expected radical surge in e-commerce traffic. They report an anticipated 40% increase in e-commerce sales this year, up from 14% in 2019. This is also considering that there won’t be a resurgence of COVID-19; if there is a resurgence, e-commerce numbers could be even higher (and brick and mortar way, way down). Since people are comfortably tucked away in their homes during the pandemic, the strong majority of consumers are moving to online purchases.
Those consumers who previously did about half online shopping and half physical storefront shopping are moving almost entirely online, and those who had never shopped online before are trying e-commerce out for everything from electronics to furniture to groceries. Cyber Monday is going to absorb almost all of Black Friday’s excitement and impulse buying.
Retailers already reported a major trend upwards for e-commerce traffic in Q2 and Q3 of 2020. Most businesses weren’t ready for that kind of shift in purchasing, so they had to quickly change business models without a contingency plan to go by. Smart businesses are working frantically and diligently to figure out how to best deliver to their online shoppers, so they’re not left in the lurch for the holiday season—aka prime time for sales. Ecommerce businesses are looking for new and improved ways to:
That last point is especially important. Even though there’s an expected ecommerce growth this year, these online sales are likely going to produce lower margins than ever before.
The surge of ecommerce growth has actually put a burden on a lot of retailers. Ecommerce has smaller margins than physical storefronts, and the margins of 2020 are looking smaller than ever before. Where are this year’s margin cuts coming in?
Even though sales are rising, this doesn’t mean retailers are going to be making a lot more this holiday season.
Just as ecommerce is up, brick-and-mortar sales will see a hefty decline, according to the CBRE 2020 holiday report. Although total retail sales will increase, it’s driven entirely by unprecedented economic growth.
Unfortunately, physical storefronts aren’t going to benefit from the total sale increase.
Brick-and-mortar stores will also have the added challenge of trying to create a safe and comfortable environment for employees and consumers, while still designing a festive and exciting experience for the holiday season.
This may mean storefronts will become more of an entertainment center, rather than a purchasing hub.
Retailers also have to consider safety in their factories, warehouses, and transport. Fostering safety in the warehouse is more than just heavy machinery compliance now. It’s also about decontamination robots, social distancing, and prioritizing mental and physical health over hours worked. Retailers are quickly looking to figure out how to keep employees safe while still meeting the demands of the consumer.
The holiday seasons have been progressively getting longer. The season used to be in December. Then it started on Black Friday. Now it’s practically October to January. This year, the shopping timeline for the holiday season will be the most dramatic extension yet. A lot of major retailers have already started offering major promotions. For example, Amazon’s Prime Day is in October, which has really launched the first of the holiday deals this year.
A lot of other retailers, like Target, have decided to price match during these times, which is essentially launching us into the holiday promotional season. Moreover, a lot of retailers have decided not to open on Thanksgiving this year, letting employees spend the holiday with their families. They’ll also change Black Friday promotions to minimize overcrowding and meet social distancing requirements. For a lot of retailers, this means moving promotions entirely online (Cyber Monday) or offering Black Friday promotions all throughout November and December.
It’s not just retailers lengthening the season either. Consumers are shopping earlier to avoid crowds and ensure they receive their products, knowing that goods are scarce and shipping is at low capacity. Stores are starting promotions early, and consumers are happy to start buying for the holidays even before October.
In recent years, consumers were leaning towards gifts that centered around travel, experiences, and impulsive purchases. COVID-19 effectively shut down a lot of travel and experiences, pushing people more towards “homebody” lifestyles. The popular gifts this year are likely going to reflect this work-from-home and play-from-home lifestyle.
In this season’s trends, home decor is popular, while apparel and travel goods are on the decline. Electronics are also going to be surprisingly unpopular this year. Since lot of people will be indefinitely working and learning from home, they already purchased a lot of home office equipment and entertainment devices over the summer.
Some departments we expect to thrive this season:
There will likely also be fewer gifts overall. With more economic uncertainty, consumers will likely purchase gifts for their immediate family but not necessarily for coworkers, teachers, and friends like in years past. The overall holiday industry might take a hit as well since holiday travel and entertaining will also be significantly less than in years past.
CBRE sums up their report with the tagline: a holiday shopping season like no other.
COVID-19 has brought changes to every industry, and even the holidays are not immune. Although there are going to be disruptions and challenges, the good news is that the report still expects consumers to make purchases and overall retail revenue to increase from last year. The economy is still on the rise following the lockdowns, and the holiday season might just be the rebound we need to get back to the economic trajectory pre-pandemic.
You can read the CBRE report and their takeaways here.
Want to ensure that your supply chain is ready to keep up with and ahead of these 2020 retail holiday trends? Let our team of experts help you prepare.