It’s that time of year again.
Brands are planning their Christmas activity, and Santa’s deciding who’s been naughty and who’s been nice.
For many retailers gearing up for the festive season, COVID-19 has cast doubt on future plans. A quarter of professionals in the industry expect revenue to decline in the next year and 22% say their company has enacted pay cuts as a result of the pandemic.
There’s hope the festive season will offer an opportunity to recapture consumer spending otherwise lost to the global pandemic.
But the question is, will consumers feel secure enough to spend this Christmas?
To maximize sales, brands must understand how consumers shop when uncertainty is still rife, and the prospect of a second wave is looming.
Though it’s been a year in flux, these are our four top tips for marketers preparing for the Christmas shopping period in 2020.
1. Empathize with financially conscious consumers.
Since last year, the percentage of consumers expecting their country’s economy to get worse has jumped from 19% to 36%. Likewise, expectations for worsening personal finances have also increased from 10% to 20%.
While the relative increase is more or less equivalent, consumers expect the economy to be hit harder than themselves personally. So will this affect how consumers shop this Christmas?
Our research from June showed that many consumers are undeterred – 44% of Christmas shoppers in the U.S. and UK say they’ll spend as they normally would this year.
Of course, this can all change in the event of a second wave and another large scale lockdown. We know that two-thirds of consumers globally are concerned about a second wave, rising to three-quarters in the UK and the U.S. This uncertainty will be a key theme this Christmas.
Nearly a quarter of Christmas shoppers in the UK and U.S. say they’re planning to spend less on Christmas shopping this year. A further 18% say they’ll have a better idea when the situation with COVID-19 improves. That means that just over 40% of Christmas shoppers are likely to be more financially conscious than they might have been previously.
Habits are set to change also – 14% of consumers in the U.S./UK say they’ll buy more in advance to spread the costs and 31% plan to buy more gifts that are on sale.
Promotional days such as Black Friday in the West and Singles’ Day in China are set to be huge occasions for 2020 retail as people look to get ahead on their Christmas shopping and save money.
2. Don’t hesitate to engage with older consumers on social media.
The start of lockdown saw huge booms in media consumption as people spent more time indoors. For younger people, these spikes in activity quickly settled to levels near to that of pre-lockdown. But for older consumers, activity growth continued over time.
For baby boomers, the data indicates a deepening of engagement across a variety of media, but particularly for digital channels such as social media.
It’s for these older age groups where brands must expand their social media advertising and be more active.
35% of Gen Xers and boomers report spending more time on social media since the start of the lockdown and 63% have been spending more time using their smartphones.
Social media has been firmly embedded in the purchase journey for several years – especially in the brand discovery and research stages. While Gen Z are the most likely to use social media to research new brands (50%), baby boomers are increasingly using this medium.
In 2015, 18% of baby boomers used social networks to research new brands online, by 2020 this has jumped up to 26%.
Today, 23% of consumers have liked/followed a brand on social media in the last month – rising to 27% of Gen Zs. 19% of GenX/boomers have also done this, which represents how using social media, as a way to connect with brands now has cross-generational appeal.
Failing to connect with older age groups can be a missed opportunity; among Christmas shoppers, baby boomers are the most likely generation to be spending as they normally would.
To reach this lucrative audience, retailers must be going beyond traditional avenues and develop their social media campaigns.
3. Embrace ecommerce.
Ecommerce as a way to shop has been growing in popularity for years, but COVID-19 shifted it into a whole new gear.
Globally, consumers are now more likely to prefer to shop online (58%) than in-store (42%).
The circumstantial spikes in online shopping don’t appear to be temporary — around half of consumers anticipate buying products online more often after the outbreak.
This could even be an asset in the event of a second wave. The more concerned someone is about another wave, the more likely they are to say they’ll shop online to a greater extent.
As such, ecommerce isn’t just a staple for any retailer, it’s also a way of hedging bets against factors outside of retailers’ control.
So, Christmas shopping this year is set to be more online than ever before. Coupled with the increased momentum of the likes of Prime Day and hygiene concerns putting shoppers off the in-store experience, as Internet Retailing rather appropriately coined, this year could be a very “Merry Clickmas”.
And it’s not just gifts that consumers will purchase. A major category that’s seen a boost in recent months is online grocery shopping.
While China remains the top purchaser of groceries online, demand there is slowly falling. It’s the rest of the world that’s seeing the most exciting growth as a result of COVID-19.
Between Q3 2019 and Q2 2020, the percentage of internet users who’ve purchased grocery items online in Europe has steadily increased from 20% to 24%; a small, but statistically significant increase. In the U.S./Canada this is even greater, growing from 21% to 31%.
As the observance of religious holidays varies by country, it’s promising for online grocery providers that demand for their services is growing most in Western, markets where Christmas is celebrated.
Purchases of premium food and drinks (commonly of the alcoholic variety) climb above the annual average in December, presenting an opportunity for retailers to capitalize on the increased demand and make online the go-to shopping method for even more consumers.
4. Get your advertising right.
2020 has been a year like no other. Brands should take caution when planning for their Christmas advertising because the situation could change every day.
Christmas day could come during another lockdown, or COVID-19 cases could have fallen dramatically. We just don’t know.
Brands must put precautions in place and be ready to pivot their messaging dependent on the current situation. Gone are the year-long lead times on advertisements – it pays to be nimble and have a holistic understanding of consumers’ feelings.
Right now, for example, many people are looking forward to Christmas and advertisements as a form of escape from everything that 2020 and COVID-19 has thrown at us.
3 in 4 consumers in 20 markets approve of brands providing funny/lighthearted content.
It’s a balancing act though. The pandemic has financially affected consumers to different extents. While for many a nostalgic and heartwarming advert may be welcomed, for those out of a job this year, a big budget production may hit cold.
To test the waters of consumer sentiment, brands need to look beyond the “where” and the “what”, and focus on “why” consumers are compelled to act and think in certain ways. In times of increased consumer sensitivity when brands’ reputation may be a stake, gauging attitudes and optimism has never been so important.
Calls for brands to be socially responsible jumped up significantly as the world entered lockdown earlier this year. Especially in several key western markets.
In volatile times especially, doing the right thing is crucial – consumers who want brands to be socially responsible are 19% more likely to be loyal to brands they like.
Brands have every opportunity to have a Merry Christmas, at the end of what has been a tough year for many.
Key takeaways for brands gearing up for Christmas:
- Get closer to your target market’s attitudes and optimism to avoid being tone deaf. Show compassion – especially in advertising – to consumers who are feeling the pinch right now.
- Invest in your ecommerce offering – Christmas shopping this year is likely to be primarily online whether we witness a second wave or not. The stakes are much higher, and a lapse in service or reliability could lead to a shopper navigating to a different site just a click away.
- Think about your marketing mix. The rules have changed, and digital channels are no longer about reaching younger groups exclusively. Older individuals are embracing these channels too, and this looks to be a permanent feature of their online behaviors.