Cyber Monday, like Black Friday, is really a misleading term. No one is limiting their online shopping to a single day, particularly this year. In fact, many have begun their shopping in October with sales kicking off already last month.
Never mind one day, 2020 became the year of eCommerce
Online retail spending far exceeded any predictions, as consumers stuck at home turned to their devices for shopping. In Q3 alone, as reported in APN News, the amount spent online on retail in the US amounted to $218.1 billion, representing a 50% increase from last year’s Q3 of $145.5 billion.
The NRF reports that, continuing the trend that took off under lockdown, 60% of people surveyed said they intend to do their holiday shopping online. The overwhelming majority of those (91%) planned to use free shipping, while 44% said they would opt for BOPIS (buy online, pick up in store).
The variations that exist just in the choices for online ordering highlight the need to cater to different types of customer segments. For this holiday season, successful marketers will target their customers with offers and messaging that reflects an understanding of their concerns and preferences.
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5 customer segments for 2020 holidays
In predicting 2020 holiday spending, Nielsen offered five distinct customer segments in order of increasing expenditures:
- Constrained and Restricted: Already financially constrained or newly constrained, having suffered income loss as a result of COVID-19, these consumers have less money to spend. Due to local restrictions to travel, business openings, and social interaction, these consumers also have less freedom to physically congregate and shop for their holiday needs. As a result of limited physical shopping, they may have less opportunity to shop around for the best deals and assortment.
- Constrained but Free: Already financially constrained or newly constrained, having suffered income loss as a result of COVID-19, these consumers have less money to spend. They are likely to have a savings mindset as they prepare for the festive season, but because they have no physical restrictions, they will have more freedom to celebrate with others and to seek the right products and price points to suit their needs.
- Cautious Middle: Not yet impacted financially, and their celebrations unlimited by physical restrictions, these consumers hold fears for what might be in store in the near future. They’re more likely to be cautious spenders and may prioritize occasion and gift giving with only those closest to them.
- Insulated but Restricted: These consumers aren’t financially impacted by COVID-19, but their festivities will be affected by local physical restrictions. Smaller gatherings may curtail normal spending and encourage self-indulgent celebrations. Financial flexibility will drive these consumers to splurge in some ways to compensate for experiences that are no longer possible (e.g., travel).
- Insulated and Free: These consumers aren’t financially impacted by COVID-19, but, while their own social interactions may not be restricted, their typical celebrations may be affected by those unable to be with them this year. These consumers are likely to spend the most freely and to exhibit pre-COVID-19 holiday behavior. Many will be compensating for luxuries forgone earlier in the year and may be more inclined to help those less fortunate, especially those close to them.
“The tried-and-true holiday playbook is largely out the window” the Nielsen report concludes, though it does see a silver lining in that cloud: “There is still strong demand among consumers eager to celebrate in different ways this year.”
The challenge for retailers is appealing to their customer base according to their particular situation and offering them what they seek in terms of value and meaning.
3 key things to remember
Whichever segment one is targeting, there are three key things to remember: value, relevance, and centering on the home.
Everyone wants value
“Constrained consumers will be the most selective, using online shopping to search for the best prices without leaving home,” Nielsen points out. But even those “insulated consumers” who are in the market for more lavish purchases want to feel they are getting a good deal on those purchases and so will be on the lookout for holiday promotions on those items.
Show how what you sell is relevant to holiday celebration
“Showing how your product or service can contribute to a celebration, even if it’s focused on the self or a single household,” observed Lauren Fernandes, director of the Nielsen Intelligence Unit, will make customers consider adding it to their holiday list even if it’s not what they would have had on it in a traditional year.
Along the same lines, the article touches on changing definitions for both “what and who will be considered essential to each consumer.” That creates new possibilities for what makes the cut as “giftable.”
Accordingly, it is possible that many products that are not normally associated with gifts will sell better this year. Particularly among the more constrained categories, there could be great appeal in purchasing items that are not normally considered luxuries but would be beyond the non-holiday budget.
Home is where the heart is for holiday 2020
Lockdowns and voluntarily staying in and eating goods made in our own kitchens has made the home and hearth concept our reality. This will also influence holiday spending. “Constrained consumers will seek to limit their out-of-home expenses by relying on home cooking and homemade gifts where possible,” Nielsen predicts.
Those who do have the money to spend will likely also be looking for indulgences in kitchen gadgets, dishes, and accessories for their homes. For those customers, brands can highlight how what they sell can enhance their home holiday experience with the ingredients, tools, and decorative touches to set a truly festive table when entertaining family at home.
We’ve all had to adapt to a new normal, and the businesses that were able to deliver what their customers needed did very well indeed. The payoff for big box retailers that were able to capitalize on the increasing demand for eCommerce was of huge success.
Costco reported a growth of 91% in eCommerce sales. Target more than doubled that with 195% growth, and, Best Buy has the ultimate bragging rights with a boost of 242%, reported by APN News.
These retailers are already gearing up for a smashingly successful holiday season even with limited in-store shopping. Smaller retailers can adapt the same strategy for success, not limiting themselves to Cyber Monday specials, but reaching out to their customers to assure them they can meet their current holiday needs.
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