Even a global pandemic can’t cancel the holidays this year. But now, consumers and companies are shifting their holiday habits to protect their physical and fiscal health due to COVID-19.

Consider the iconic retail tradition of children visiting shopping malls to sit on Santa’s lap. Instead, malls will invite kids to sit atop wrapped packages near a masked Santa, take photos of the jolly fellow as he stands behind a plexiglass snow globe or join him on a Zoom call.1Kavilanz, Parja. A very Covid Christmas: Mall Santas will see kids from behind plexiglass snowglobes. CNN Business. October 7, 2020. Just like the olden days.

New holiday shopping practices matter because sales in November and December can account for 20% of a retailer’s total annual revenue.2 Maheshwari, Sapna and Gillian Friedman. Ho, Ho, Hum: Struggling Retailers Brace for a Muted Holiday Season.The New York Times. September 2, 2020. Also, 20% of retail businesses say their future depends on this year’s holiday results.3Why Retailers Need to Get Proactive – And Digital – Ahead of the Holidays. PayPal. September 2020.

Let’s see how retailers and suppliers can navigate COVID-19’s impact on holiday sales – and why smaller companies have reasons to feel hope and cheer this festive season.

Prime Day 2020 shows Amazon’s industry influence

Jumpstarting the 2020 holiday sales season, Amazon moved its annual Prime Day sales event from July to the fourth quarter (October 13 and 14) for the first time. While Amazon has yet to disclose total sales figures for Prime Day, the e-commerce giant reported record-setting results related to small and midsize business (SMB) suppliers:

  • $3.5 billion in Prime Day sales came from SMBs, representing a 60% increase year-over-year
  • >2.3 million SMBs sell on Amazon’s online marketplace
  • 58% of Amazon’s total merchandise sold comes from these third-party sellers4Palmer, Annie. Amazon says third-party sellers made more than $3.5 billion from Prime Day. CNBC. October 15, 2020.

Yet Amazon wasn’t the only retailer getting the holiday sales party started. During Prime Day, competitors held concurrent sales events, including Walmart’s Big Save Event, Target’s Deal Days and BJ’s Wholesale Club’s Beyond Amazing Savings Event. Given all these sales, consumers had a chance to win big on Prime Day – if they shopped around.

“Prime Day helps everybody who sells online.”

~ Retail analyst Robby Ohmes5 Repko, Melissa. Retailers hope Amazon’s Prime Day on Tuesday kicks off early holiday shopping season. CNBC. October 12, 2020.

Yet what’s most remarkable is Amazon’s industry influence. By holding Prime Day in mid-October, Amazon pulled the entire industry – competitors and consumers alike – forward by six weeks. Extending the holiday sales season from Halloween ghouls to Christmas yule reduces strain on the supply chain. It can also help companies avoid bottlenecks and out-of-stocks so gifts arrive on time. It even helps Amazon grow as a force in global retail and steals the thunder of Chinese e-commerce rival Alibaba’s annual Singles Day event, held on November 11.

Black Friday and Cyber Monday 2020 trends

In recent years, early “Cyber November” campaigns tried to attract consumers before Black Friday and Cyber Monday sales. Now retail is embracing a Cyber Q4 – and Prime Day 2020 paved the way.

To bridge the gap between Prime Day and Christmas, Amazon will offer Holiday Dash Deals, an ongoing sales promotion that promises “Black Friday-worthy” savings.6Anderson, George. Amazon follows record-setting Prime Day with Holiday Dash Deal events. RetailWire. October 16, 2020. Walmart will sprinkle holiday deals across three separate sales events in November in its Black Friday Deals for Days campaign.7 Unglesbee, Ben. Walmart spreads Black Friday deals throughout November. Retail Dive. October 14, 2020. Best Buy also guarantees Black Friday pricing on several products now so shoppers don’t have to wait.8 Elliott, Matt. The best deals at Best Buy’s early Black Friday sale. CNET. October 24, 2020.

Given 2020’s expanded sales period, consulting firm AlixPartners called the traditional November to December holiday shopping season ‘meaningless’ this year.9Wilson, Marianne. Holiday sales to rise 1.0% to 2.6% but over a longer period than in years past. Chain Store Age. September 21, 2020

Check out this guide on setting your brand up for success this Black Friday and Cyber Monday.

How retail companies can adapt to 2020 holiday trends

Retailers and brands can prepare now to face the following trends this holiday season. Here’s how:      

Digital galore

Experts expect e-commerce to grow by nearly 20% in 2020 as it emerges as a business necessity. It’s also a more ingrained consumer habit, as 62% of U.S. shoppers say they shop more online now than they did before the pandemic.10 Morgan, Blake. 50 Statistics Showing The Lasting Impact Of COVID-19 On Consumers. Forbes. October 19, 2020. Now smaller retailers and brands are picking tech partners like Shopify, Etsy, Amazon, or Facebook to reach consumers online, especially if more lockdowns lie ahead. Larger companies are investing more in their own e-commerce operations to handle increased traffic and demand. Suppliers are also prioritizing their digital and social media presence, as McKinsey found 21% of consumers now research their brand and product choices before they buy.11Survey: US consumer sentiment during the coronavirus crisis. McKinsey & Company. October 20, 2020.

Speed + safety

As consumers seek safe service and time savings, buy online, pick up in-store (BOPIS) orders grew 208% year-over-year between April 1 and 20, 2020.12 Thomas, Lauren. Curbside pickup at retail stores surges 208% during coronavirus pandemic. CNBC. April 27, 2020. Beauty giant Sephora recently partnered with Instacart for same-day e-commerce delivery.13 Keyes, Daniel. Instacart is adding Sephora to its marketplace in a push to support all on-demand delivery needs. Business Insider. September 28, 2020. For a snappy in-store experience, Target offers its Wallet app for fast, contactless self-checkout and customers can reserve a spot in line digitally and receive a text when they can enter.14 Unglesbee, Ben. Target adds more safety features ahead of the holidays. Retail Dive. October 22, 2020. Seeking efficiency, 87% of consumers prefer to shop at stores with touchless or robust self-checkout options.15 Morgan, Blake. 50 Statistics Showing The Lasting Impact Of COVID-19 On Consumers. Forbes. October 19, 2020. Curbside pickup, in-store sanitization protocols, and reduced store occupancy levels are more 2020 best practices.

Value for money

Deloitte found 38% of consumers plan to spend less this holiday season due to economic instability and McKinsey found 31% of consumers are switching to less expensive products to save money.16 Howland, Daphne. Deloitte finds US consumers anxious about their finances, health ahead of the holidays. Retail Dive. October 20, 2020. 17Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis. McKinsey & Company. July 8, 2020. These trends suggest retailers and suppliers offering affordable, essential goods can stand out. While Walmart, Target, Dollar General, and retailers with private label lines are well-positioned to serve increasingly price-sensitive consumers, smaller companies can also appeal to value-oriented shoppers by offering deals, discounts and product bundles.

Competitive assortments

According to Deloitte, shoppers will visit fewer stores than ever this holiday season (an average of 5.2 stores vs. 7 in 2019). Retailers can collaborate with suppliers whose in-demand products could make their assortment more appealing to discerning shoppers.18 Thomas, Lauren. Shoppers plan to visit fewer stores than ever this holiday season, survey says. CNBC. October 20, 2020.

“We’ve seen a focus on home like never before.”

~ Marisa Thalberg, Chief Marketing Officer, Lowe’s19 Hensel, Anna. Why Lowe’s is expanding beyond hardware to capitalize on holiday sales. ModernRetail. October 20, 2020.

As retailers build their assortments, two hot categories stand out:

Home: Home-related subcategories like kitchen items and furniture are booming as the pandemic transforms us into homebodies. As more consumers invest in redecorating or renovating their homes this year, Lowe’s second quarter revenue rose 30% year-over-year and online sales rose 135%.20 Hensel, Anna. Why Lowe’s is expanding beyond hardware to capitalize on holiday sales. ModernRetail. October 20, 2020.

Toys: Children want everything under the Christmas tree after this dud of a year. Toy manufacturer Hasbro earned 13% sales growth year-over-year in the first nine months of the year, as parents tried to cheer up their children with fun distractions.21 Toymakers expect strong Christmas sales despite coronavirus. BBC News. October 26, 2020. Meanwhile, Target partnered with FAO Schwarz to offer an exclusive line of upscale toys and Toys R Us partnered with Amazon on e-commerce to deliver more toys than Santa.22 Ryan, Tom. Will FAO Schwarz make Target a bigger player in toys? RetailWire. October 13, 2020. 23Verdon, Joan. Toys R Us, Amazon Are Linked Online Again, After E-Commerce Deal With Target Ends. Forbes. August 19, 2020.

Regardless of the categories they sell, retailers and brands can embrace 2020’s core themes of slowing down and savoring simple joys at home.

Although the COVID-19 pandemic has shaken up the 2020 holiday sales season, retail companies of all sizes face new opportunities to succeed. Adapting to today’s powerful economic and technology factors can help companies decide what to prioritize. Companies can also get creative in serving consumers’ timeless needs for family togetherness, gratitude, and presence as 2020’s most joyful presents.

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