Understanding changing consumer behaviours this holiday season – and how marketers can gain confidence into 2021

Eric Hazan is a senior partner at McKinsey & Company.

Arriving in the midst of the Covid-19 pandemic, this holiday season will undoubtedly turn out different than most. The crisis has widened consumer appetite for choice and introduced unexpected shifts in consumer behaviour. Our 2020 Holiday Season research revealed that safety and uncertainty remain dominant features of daily life, and this is altering both how consumers shop and what they plan to buy. Instead of door-busting crowds, 2020’s holiday shoppers will turn to apps and websites in record numbers, taking advantage of click-and-collect as an option that provides both safety and convenience. It’s a massive shift to digital, 37 percent of shoppers plan to purchase more online this year than last. Consumers are also more likely to get an early start on shopping to avoid potential supply or delivery problems and will be shopping for more products geared toward spending time at home.

These changes represent an opportunity for brand and marketing leaders to connect with large numbers of consumers who have adopted new habits, are open to new brands, or are looking for new gift ideas.

Winning back loyalty

Since March, over 60 percent of global consumers have tried a new shopping behaviour in response to economic pressures, store closings, and changing priorities. As the holiday season kicks into high gear, many of these consumers remain open to new possibilities. Only 12 percent intend to stick with the same retailers they shopped with last year. Globally, 37 percent of respondents said they intended to spend more online during the holidays this year than they did last year, with UK consumers leading the way. Now that the UK is in the grip of November restrictions to curb a surge in COVID-19 cases, consumers will likely return to the digital shopping behaviours akin to the first lockdown.

Brand and marketing leaders have an opportunity to win back loyalty by making their omnichannel shopping experience stand out, understanding what their customers want, and targeting them with appealing, relevant gift ideas. Personalisation and social media engagement could hold the key to winning with new and existing customers this year— 31 percent of shoppers said they would use social media for holiday research and ideas, and 25 percent said personalised campaigns could trigger a gift purchase.

With many consumers doing far less aisle-wandering and having fewer touch-and-feel experiences this year, retailers that best simulate these environments online will be able to capture those unexpected purchases. Marketing and brand leaders should consider increasing the number of product photos, easy-to-compare features, user reviews, and generous return policies to improve browsing confidence. Those who perform well this season will personalise the browsing experience, merging data on customer characteristics and preferences with information on trending holiday products to optimise the assortment of products each digital shopper sees. At the same time, leading omnichannel brands will use the opportunity to invite customers into the store for browsing, as 45 percent still plan to shop to some degree in stores.

Deal hunting dominates

When we asked holiday shoppers about their intentions, we noted a few important caveats. Despite 44 percent of holiday shoppers reporting a slight or significant income reduction this year, 82 percent said they would spend the same or more as last year on big holiday deal events. Nonetheless, what the data reveals is that many consumers long for the normalcy and familiarity that big holiday shopping events provide – as well as the desire for savings – and more than three-quarters of the consumers in our survey said they intend to participate in them. Across all countries, the most confident holiday spenders are in the 18–39 age group.

As is the case in most years, the ability to get a great price or hot promotion on a particular product is the top factor guiding holiday shoppers’ decisions about which retailer to shop from. Now the most popular deal event in the United Kingdom, 61 percent of holiday shoppers planned to participate in Black Friday this year, up from 51 percent last year. Boxing Day Sales were cited as the second most popular event, followed closely by pre-Christmas Sales and Cyber Monday. Of course, the popularity of event days will be determined by digital strategies.

Alongside digital nous, marketing and brand leaders will have to consider the emotional welfare of consumers this year, in ways that they haven’t had to before. Stress and anxiety about the holiday shopping season has risen over the last 12 months. Our survey showed that an average of 20 percent of holiday shoppers are anxious and/or stressed this year, with much higher levels in the United Kingdom. As such, marketing leaders will need to be careful about the timing of their promotions and any messaging that seems to encourage onslaughts of in-store shopping. Operating under new restrictions, they will also need to consider what digital experiences they can offer to replace the festive longing to browse in store. Finally, brands that provide consumers with easy options for buying the products they want— whether traditional home delivery, buy online for instore pickup, or curbside—will be best positioned to attract new customers and win back old ones.

Making the most out of this season

Ultimately, brands that have taken the time to understand how their customers have changed and have invested in the digital and omni-channel capabilities to offer them convenience, safety, and certainty during peak will do well this year and heading into 2021.

Photo by Markus Spiske on Unsplash

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