4 predictions for an uncertain 2020 US holiday shopping season

Economic uncertainty, the acceleration of digital commerce, and an October Prime Day will make this holiday season unlike any other.
08 September 2020
US Retail Holiday Predictions
Tory Gundelach

SVP, Retail Insights, Kantar

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While holiday buzz has been inching earlier and earlier for several years, the uncertainty of 2020 has both retail professionals and shoppers asking what lies ahead for this critical time of the year. Even while everyone is clamoring for a peek into the future, we also are living in a time where one week feels like one year, yet so much can change in just a short period. Shoppers’ holiday spirits — and therefore, wallets — will also depend on the progress toward treatments or a vaccine for COVID-19. We sit here in early September, but come November-December, we could know much more, good or bad, on that front. Here are four predictions for holiday 2020 based on what we know today:

The season will start earlier and spread throughout the fall months.

With an already stressed supply chain, retailers will want to spread out demand more evenly across the season to minimize store crowds and smooth out ecommerce and omnichannel operations. Don’t expect many blowout in-store events for Black Friday. For the past few years, we have seen Black Friday, Cyber Monday, and Cyber Week bleed together, and this year, those events will converge further with the rest of the holiday season. Shoppers will want to start shopping earlier after being burned in the spring by out-of-stocks, lack of pickup windows, and delivery delays. 

Fueling both retailers’ and shoppers’ desire to start shopping earlier are the announcements from USPS, UPS, and FedEx about holiday package surcharges. Expect to see promotions spread more evenly throughout the season, but also promotions that steer shoppers toward pickup or same-day delivery services using personal shoppers instead of ship-to-home options. More than they have in the past, retailers will also use discount level and length as a lever to control inventory as the season plays out.

Brand and retailer messaging will need to walk a fine line.

While the holiday season will be a great opportunity to uplift and relieve shoppers of the everyday struggles that have characterized 2020, messaging must feel relevant against the backdrop of current economic, health, and societal realities. Messages should feel good without being tone-deaf. Shoppers will also be watching how brands and retailers treat the community and their employees. Several retailers including Target and Walmart have already announced that they will not open on Thanksgiving Day to give their employees a much-needed break.

Holiday traditions will look different, but not vanish.

This has been true of every holiday so far in the pandemic. In many cases, these changes to traditions joined with and heightened trends already present in the pandemic. So far, many of the dollars that shoppers had spent in years past on experiences and services have shifted back to physical goods. That will impact gift giving, making items that help both kids and adults bear staying home more popular.

Depending on what happens with the economy and any government stimulus, we may see a tale of two shopper groups. One group will pull back spending due to months of job instability and future uncertainty. The other will spend the money saved on travel and dining out to give families a joyful end to a hard year.

Outside of gift giving, food consumption and entertaining will look different. Since March, shoppers have shifted money they would normally have spent at restaurants to food at home, and that will not change during the holiday season. November and December are always key months for baking, but since baking has become one of the most popular pandemic pastimes, expect this category to drive sales, but also to run into out-of-stock issues. With smaller gatherings, expect less spending on entertainment products and more spending on kitchen appliances, gadgets, and other at home cooking essentials.

Regionality will be heightened.

Throughout 2020, we have seen COVID-19 and the economic situation play out significantly differently across regions and states. Both of these factors will dramatically impact what happens during the holiday season. It’s possible that come November and December, some states may be back under stay-at-home orders with only essential retailers open. Additionally, with fewer people traveling for the holidays, stores anchored in large urban markets are more likely to see a down year relative to rural and exurban stores. Many retailers will have a go-to-market strategy by store based on local conditions and the physical facility. Online sales will shatter records across the country this year, but in some areas, going online may be shoppers’ only way to buy niche or nonessential product categories. 

Also, expect a push to support local businesses. The term Black Friday describes the day that businesses turn the profitability corner. But after a tough year, the reality for many small businesses is that they will either succeed or perish during the holiday. And that won’t be true just for local retailers. Expect struggling local restaurants and other attractions to push gift cards in an effort to stay afloat.

Overall, holiday 2020 will be a wild ride. Certain items and product categories will unexpectedly take off and shopping behavior will be determined by factors outside of retail, including a potential vaccine. But as always, there will be winners and losers this holiday season. While the year has been anything but calm and the near-term outlook may not be uniformly bright, it will still be fascinating to watch the season unfold to see where pockets of good tidings may appear.

What can you apply from the 2019 holiday season?

While this year will be a completely different beast, there are still directional guides to carry through from 2019. Which retailers and trends won with holiday shoppers last year? Complete the form below to revisit key shopper trends from Holiday 2019:

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