A 2020 Holiday review (and lessons learned)
For most, the Christmas decorations are down, and the new year is in full swing. The retail industry is finally getting an overview of how well the 2020 holiday shopping season went and is examining lessons learned.
Initially, experts forecasted much lower sales for the holiday season because of COVID-19 related concerns including tight consumer budgets, and much fewer shoppers heading to shop in-person. Instead, sales soared. Between many retailers expanding their sales to include most of November and inventory scarcity, the 2020 holiday shopping season saw gains.
According to a study reported in Fortune, total holiday retail sales grew by at least 3% compared to the forecasted 2.4% growth. The holiday spending season was measured from October 11 through December 24 because most major retailers (and many small ones) started their holiday specials much earlier than normal. Within the traditional holiday period from the start of November to Christmas Eve, sales grew 2.4%, according to the report.
Not surprisingly, e-commerce sales rose drastically. Online sales rose 49% compared to 2019 holiday sales and E-commerce now accounts for 1 in 5 dollars spent. E-commerce is likely to be the reason that there was a 3% increase in holiday sales compared to the 3.5% decrease in 2008, the last time our country faced a large recession.
Another aspect to consider is returns. Retailers expected higher than normal returns and even extended the timeline for allowing returns because so many gift deliveries were delayed this year. Because many are still accepting returns, retail industry officials do not have total numbers yet.
What are our takeaways?
E-commerce was key to making the holiday shopping season a success, but there were other factors at play.
According to this article on Retail Dive,
“With stores forced shut for weeks and sales plunging, so-called nonessential retailers, in an attempt to shore up their finances, scrambled to get a grip on their inventory, canceling orders and packing up spring merchandise for the following season,” the article reads. “By summer, a time when retailers are deep into planning for the holidays, the all-important fourth quarter seemed destined to be grim. To salvage it, the industry worked to get things going in October, as they braced themselves for more pandemic fallout.”
Instead, the smaller inventory improved their situation, it seems. Retailers had less remaining inventory (meaning fewer clearance racks) and they were able to sell items at higher prices than normal for a holiday sale. Consumers also tended to purchase fewer items but ones that came at a higher price point as opposed to buying a large number of small gifts.
Retailers can translate this concept into future years to not only start sales early, but to focus on fewer items and keep them at higher price points.
It also became even more clear this year that consumers are likely to prefer shopping online and that’s where the focus should be marketing and offering specials. Offering gift cards is another takeaway that we hope gets taken into 2021 and beyond. Gift cards ship easier, will mean fewer returns, and are easy!
Did you see any other trends in holiday shopping in 2020? What did you learn that will improve things for 2021?