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5 Holiday Trends That Every Merchant Should Know in 2020

Two women shopping online

This year’s holiday shopping season is likely to be very similar to the year itself: suddenly and unexpectedly unlike anything that anyone has ever experienced. 

The rise of the COVID-19 pandemic has led to shops closing, consumers staying home, economies sinking, and companies thrown into disarray. While there has been some evidence that overall consumer spending was returning in the U.S.1 and consumer confidence was increasing in Europe,2 challenges abound for merchants to capture both the traditional holiday spirit as well as customers’ attention. 

Merchants are necessarily responding as customers change how, where, when and what they are shopping for this holiday season. Some of the consumer trends have been occurring for years; this year’s events have merely pushed them into overdrive. Other shifts, though, have been brought on by a year considered unique in the history of the marketplace.

In all, more than 60 percent of global consumers have changed their shopping behavior3 while becoming more mindful about where and how they shop. “We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” Amazon CEO Jeff Bezos said in a statement.4

A combination of modern technology and old-fashioned human nature has defined this year’s holiday season in key areas.

Broadly defined, five top trends are expected to be evident as shoppers do their holiday buying.

1. The Dominance of E-Commerce Grows

By far, the most immediate impact of the pandemic on holiday shopping—and the one that affects all others—is consumers’ preference for e-commerce. As lockdowns and social distancing have changed consumer activities throughout the world, shoppers have turned increasingly to online shopping and all forms of contactless payments. In all, an additional 110 million contactless payment cards5 are expected to be issued this year beyond original estimates.

Although already on the rise, e-commerce sales are expected to accelerate this holiday and further their growing dominance over in-store and face-to-face shopping. Almost 75 percent of shoppers6 in the U.S. said they expect to do more online shopping this year, while mobile shopping, in particular, is expected to hit record highs.7

Among the most prevalent methods globally for gift-buying is to buy-online-and-wait-for-delivery. Buy online and pick up in store, or pick up at curb, are also increasingly important in today’s environment.

Learn more about how contactless payments and QR codes are delivering new opportunities for merchants globally.

2. The Virtual Benefit of Selling Online

The irony of losing physical contact with customers is that merchants are actually getting to know customers in ways that are strikingly more personal. Traditional customers walking in the store leave little footprint to identify themselves or their contact information. Traditional loyalty programs rely on customers volunteering information from which merchants can build a profile. 

But as purchase orders increasingly come online, tracking data—including emails, mailing addresses, and phone numbers—become more prevalent, and the opportunity to offer discounts, coupons, loyalty points, and special offers proliferate for personalized offers based on items already purchased. With this increased personalization, merchants can enjoy 20 percent higher customer-satisfaction rates and up to a 15 percent boost8 in sales-conversion rates. And with advanced security measures, including EMV®  Secure Remote Commerce and ProtectBuy from Discover® Global Network using Three Domain Secure (3DS), online transactions from anywhere can be securely approved.

3. Non-Gift Gifts Increase in Popularity

The traditional idea of gifts is also changing. Luxury goods and products that have typically been chosen in-store are expected to underperform past years as the economic impact of the pandemic forces consumers to rethink priorities. Spending on services—trips, events, and entertainment—are all being affected.

Instead, consumers are focusing elsewhere. In particular, products related to work-at-home and home-schooling are expected to perform well, including electronic products for home offices or digital entertainment, and more casual clothing for today’s stay-at-home lifestyle. In all, more than two-thirds of shoppers9 say they are shifting purchases from services to products, with clothing, gift cards, and electronics the three categories of choice. In the UK,10 consumers are also refocusing their plans, with electronics, home, and fashion at the top of many lists.

Nearly one in three shoppers11 say they’ll be shopping earlier, with this year’s consumers shopping one-and-a-half weeks less12 on average than last year.

4. Shopping Local, Shopping Smart

For those shoppers who do venture out, health concerns further shape their preferences. One survey showed that shoppers are preferring local stand-alone shops as they continue to trend away from enclosed malls. Rather than spending a day indoors browsing from shop to shop, consumers are more carefully targeting their purchases at specific nearby retailers, preferring limited crowds and the ability to pick up their purchases locally.

One survey found13 that 47 percent of shoppers said they will buy products online and pick up either in-store or at the curb. For those looking to shop in person, in-store use of contactless payment alternatives, as well as the use of in-store kiosks, have also surged as consumers adopt their transaction methods in addition to masks, social distancing, and hand sanitizing. More than half of shoppers14 said they would choose stores with contactless options.

5. The Shopping Calendar Adapts

While the traditional start of holiday shopping differs among regions throughout the world, each has adapted in different ways to the current environment. China’s Single’s Day on Nov. 11, Amazon’s Prime Day, and Cyber Monday remain top events in the world for e-commerce. But the traditional Black Friday in-store crowds, and the scheduling of pre-holiday, weekend-only discounts, have all been disrupted.15

With Christmas landing on a Friday this year and fewer shoppers expected in-store, the calendar of shopping is also adapting. Delivery concerns have consumers shopping earlier, merchants discounting more frequently, and the traditional last-minute purchases expected to decline. Nearly one in three shoppers say they’ll be shopping earlier, with this year’s consumers shopping one-and-a-half weeks less on average than last year.

This year’s holiday shopping season promises to be unlike anything seen in recent history—giving rise to global trends that present both serious challenges and rich opportunities. By responding to these current shifts in customer behavior and meeting consumers where they are, merchants are able to provide the products, services, and high-quality customer experience that this year’s unprecedented shopping season requires.

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1The Wall Street Journal. October 2020. U.S. Retail Spending Picked Up Strongly in September. Viewed 30th October 2020. 

2 Reuters, September 2020. Euro zone consumer confidence rises to -13.9 in September. Viewed 2nd November 2020. 

3 McKinsey & Co., October 2020. Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis. Viewed 29th October 2020. 

4 Amazon, October 2020. Announces Third Quarter Results. Viewed 29th October 2020. 

5 ABI Research, May 2020. COVID-19 Will Drive Global Contactless Payment Card Issuance Above the 2 Billion Mark in 2020. Viewed 30th October 2020. 

6 Think with Google, July 2020. How the pandemic may affect holiday shopping. Viewed 28th October 2020. 

7 App Annie, September 2020. US Consumers to Spend 1B Hours Shopping on Mobile This Holiday Season. Viewed 30th October 2020. 

8 McKinsey & Co., April 2020. Personalizing the customer experience: Driving differentiation in retail. Viewed 29th October 2020. 

9 Coresight Research, October 2020. Holiday 2020: US Shopper Survey—How Shifting Spending Patterns Will Impact Retail. Viewed 30th October 2020. 

10 Think with Google, August 2020. 8 ways consumers in the U.K. adapted their shopping behaviour this year. Viewed 2nd November 2020. 

11 Coresight Research, October 2020. Why Are Some US Shoppers Starting Holiday Shopping Earlier This Year? Viewed 29th October 2020. 

12 Deloitte, October 2020. 2020 Deloitte holiday retail survey: Reimagining traditions. Viewed 30th October 2020. 

13 Think with Google, July 2020. How the pandemic may affect holiday shopping. Viewed 28th October 2020. 

14 Think with Google, July 2020. How the pandemic may affect holiday shopping. Viewed 28th October 2020. 

15, October 2020. Black Friday is over: Here’s why retailers are touting weeks of deals this year. Viewed 29th October 2020. 

The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.