Holidays are being planned differently by retailers and behaviors by shoppers have changed
PayPal PYPL +1.2% recently surveyed small and medium businesses in the U.S. on their response to COVID-19 and plans for the holiday shopping season. Even though it’s a peak selling season for retailers, the data revealed that only a small number (1 in 3) are proactively preparing their businesses for the holidays. The uncertainty of the holiday season (including the question of whether the holiday shopping season will be elongated), the level of consumer demand and economic factors impacting consumer spending all are weighing on the minds of retailers.
Additionally, the PayPal survey revealed that more than one-third of retailers expect holiday sales to be lower than last year. Stores are generally planning for lower inventories and promotions will start much earlier, even by October. Many retailers have already planned to close on Thanksgiving day and move Black Friday promotions to earlier in the season.
Amazon AMZN +2.1% Prime AMZN +2.1% Day, which has not yet been announced in the U.S. but is planned to take place in October, may be the impetus for the start of holiday shopping. Certainly, Amazon Prime will significantly impact mobile purchasing with the Amazon App and its over 150 million users accessing the app last September. In the same period, Walmart had a monthly mobile app audience of 86 million users.
Closed on Thanksgiving and fewer promotions on Gray Friday
Digital Commerce 360 notes that Walmart WMT -0.1% was the first to announce it would not open its physical stores on Thanksgiving 2020, and other retailers including Target TGT +2%, Home Depo HD -0.2%t, Best Bu BBY +0.8%y, Kohl’s KSS -2.5%, Ulta and Dick’s Sporting Goods DKS -2.3% have followed suit. E-commerce will likely be the beneficiary of these decisions. Katz agrees, “As many retailers decide to shut their doors on Thanksgiving Day and customers steer clear of in-store shopping more so than in previous years, there will be a shift towards e-commerce — particularly by means of mobile devices as shoppers sit inside with family and friends.”
Lipsman said in an interview about the holidays that with many physical stores closed, Thanksgiving Day becomes “Couch Commerce Day” and predicts that since people are in shopping mode it will be a huge day for m-commerce (possibly the largest to date), setting the pace for the rest of the holiday.
The desire of customers to have contactless shopping experiences will drive mobile payments
The PayPal survey found that 46% of merchants are planning to offer curbside pick-up to foster limited contact and retailers can offer cashless options to further reduce in-store contact. PayPal reported that 34% of retailers selling in stores are implementing mobile payment options such as PayPal, Google Pay, Apple AAPL -0.4% Wallet and Samsung Pay. In the last two months, 30 percent of consumers have made mobile wallet transactions for the first time. Lipsman said, “ApplePay will leapfrog over the other mobile payment options due to higher consumer engagement and it is native to the mobile phone. Any retailer can enable ApplePay to make integration easy.”
Lipsman discussed that retailers have made mobile payments much more streamlined and easier to use than in the past few years, increasing the usage rate by consumers. The mobile monetization gap (the variance between browsing on the mobile device and purchasing) has been greatly reduced both from the retailer and consumer perspective since last year.
Buy now, pay later is taking off across online retailers
Online retailers have introduced buy now, pay later payment options and experience higher order volume over the holiday season. The options allow customers to make a purchase by paying a small amount of the total purchase price, receiving the product, then making additional payments (without interest) to complete the purchase amount over time. The PayPal survey indicated 26% of retailers are likely to offer buy now, pay later options to customers this holiday season. Forty-five percent of those retailers already offering buy now, pay later expect it to drive an increase in their holiday sales. PayPal notes that retailers can convert browsers into actual shoppers with flexible payment options.
Digital-first strategies will lead the holiday selling season
COVID has accelerated the adoption and usage of mobile devices for shopping and payments. By 2024 m-commerce will be over $570 billion and represent 53% of total e-commerce sales. As retailers increase digital initiatives such as curbside, in-store pick-up and contactless payments over the holiday season and continue to integrate better e-commerce experiences on mobile devices, a massive step-change in behavior will occur: A large portion of traditional shopping (in-store or on a website) will move over to m-commerce for the holiday and into 2021.