The countdown is on. In an unusual year, retailers are preparing for a holiday shopping season that will look and feel different than past years, with the COVID-19 pandemic changing behaviors and accelerating trends. Anticipating the changes and adapting experiences will be critical for most retailers who rely on the holiday selling season for 20 percent or more of their annual sales. And, for some retailers, including toy, hobby, and game stores, the holiday season accounts for one-third or more of the year’s sales.
As you prepare for a holiday shopping season unlike any other, here are three must-dos to help put your retail business ahead of the curve.
1. Make the most of an early start.
Retail experts predict an earlier start to the holiday retail season, with several factors driving the shift. One signal is the timing of Amazon’s Prime Day, which has moved from summer to fall. For many shoppers, that is expected to be an unofficial kick-off for holiday gift-buying, rather than waiting until November to get serious about purchasing. But that’s not the only reason customers are changing their approach, and experts are recommending retailers prepare for an extended shopping season.
- Locking down items early. Based on experiences with shortages and delivery delays during lockdowns, many customers will want to make their gift purchases earlier to avoid any last-minute hassle and stress.
- Spreading out the spending. Due to potentially tighter budgets, many shoppers will be looking to spread their spending over a couple of months. The good news? Most shoppers plan to spend the same amount as last year on holiday gifts. Only 20 percent of consumers say they’re concerned about their finances, and 67 percent report cutting back on other spending to set aside money for holiday shopping.
- Celebrating virtually. For many families, holiday celebrations may go virtual. Gift givers will want to ensure their presents arrive well ahead of time.
Early demand and an extended season make inventory forecasting even more important than usual. Tap into your point-of-sale (POS) system’s capabilities to analyze your inventory data, factoring in current market trends, past holiday demand, and planned marketing campaigns. Share your forecasts and work with your suppliers in advance to determine timelines and identify any potential capacity issues. Dig into the details to understand how supply chains may be affected by the pandemic and add cushion to both order quantities and lead times.
Stay up-to-the-minute on how your forecast is tracking with customer behaviors by setting up regular inventory reports, stock-turn reports by item, and automated reorder points within your POS system. Monitoring and adjusting your forecast quickly can make a big difference. It’s estimated retailers miss out on up to $1 trillion in sales because they don’t have the items customers want to buy in-stock, while unsold inventory costs U.S. retailers an estimated $50 billion per year.
Related: Inventory Forecasting: A Guide to Accuracy and Getting Started
2. Offer omnichannel options.
The pandemic has accelerated the trend toward omnichannel shopping. Buyers have become more comfortable with including an online element in their purchases. And they expect retailers to give them the options to move fluidly between online, mobile, and brick-and-mortar shopping experiences.
In the midst of social distancing precautions, experts anticipate shoppers will increase their online shopping this holiday season. Eighty-eight percent of shoppers plan to forgo the crowds, and in-store deals traditionally offered on Thanksgiving Day and Black Friday. (As a result, many large retailers are announcing they’ll be closed on Thanksgiving.) However, customers aren’t looking to shift to online shopping only. In fact, most shoppers – across all ages – rank visiting a brick-and-mortar store as their preferred shopping experience when they’re ready to make a purchase.
What’s changing is the expectations for integration. Customers may want to start browsing on their smartphones, do more in-depth comparisons online, and then visit the store when they’ve narrowed their options and are ready to make a final decision. Make it as easy as possible for your customers to transition from online to offline and back again. Your POS system can help by providing a single integrated view of inventory, sales, and customers, which enables you to offer options that respond to customer expectations and enhance their overall experience.
For example, centralized inventory management gives you the ability to offer a “click-and-collect” option that allows customers to buy online and then pick up in-store (aka BOPIS). Along with added convenience, shoppers electing this option also eliminate shipping charges. Even before the pandemic, more than half of shoppers took advantage of BOPIS in prior holiday shopping seasons, and nearly one in three say they’re more interested in it this year. And it’s a profitable option for retailers, too. Eighty-five percent of shoppers report buying additional items when they go into the store to pick up their online orders.
Related: Customer Expectations: Why Retailers Need to Deliver an Omnichannel Experience
3. Anticipate shipping delays this holiday shopping season.
The big shipping providers – FedEx, UPS, and DHL – are expected to exceed their capacity in the weeks before Christmas. That means an estimated 700 million gifts will be at risk of not arriving in time for holiday celebrations. In addition to promoting early shopping to your customers, get creative. Offer special discounts or extra loyalty program points for customers who choose curbside pick-up for online orders. And provide clear communication about shipping options, cut-off dates, and estimated delivery timelines.
As COVID-19 prompts customers to change their shopping behaviors, expect some of the shifts to last. The pandemic has accelerated the move to omnichannel shopping, with more shoppers getting comfortable with online searching and purchasing. Heading into the holiday season and in preparation for the new year, focus on strategies to engage your customers and increase e-commerce options. POSIM can help. Download our latest resource, Countdown to the Holidays: 10 Steps to Optimize Inventory Management and Increase Sales. Then, contact us to learn more about POSIM’s e-commerce, point-of-sale, and inventory management capabilities.