Digital Trends Shaping 2020 Holiday Shopping

omnichannel holidays illustration

In a year unlike any other, retailers are experiencing a holiday shopping season unlike any other.

As public health concerns have consumers engaging in more online ordering and a down economy impacts spending, typical habits are out the door. Merchants’ varying degrees of digital readiness will, in turn, have an outsize impact on their success.

We expect this year’s vast differences to manifest for retailers in a few different ways. And based on what we know about customer loyalty and data-driven engagement, the way retailers address these trends will determine whether consumers return over the long run.

Small Retailers Playing a Bigger Role

As Mastercard found in a recent report, “While small businesses traditionally lagged behind larger ones in omnichannel presence, the trends of both shopping local and shopping from home converged to ignite a need for them to go online – and fast.” This rapid shift has brought more competition in ecommerce from smaller retailers, which traditionally benefit from more loyal customer bases.

While there will undoubtedly be a higher volume of digital competition, there are still questions around the impact that will have on larger retailers. Two factors will determine the answer.

First, how well did smaller retailers deploy their digital presence? A poor experience can turn people away. The customer experience over the holidays is likely to determine whether those customers become long-term buyers.

Second, how well can smaller retailers translate their in-store experience online? Personalization is easier in person and on a smaller scale, so this will be a new challenge for many that are newly online.

Customers Browsing the Digital Racks

Especially around the holiday shopping season, in-store means browsing the racks for gifts and last-minute impulse buys of stocking stuffers found while waiting in line. In a recent MasterCard survey, 57% of consumers who are cutting back in-store shopping this year said they will miss the ability to touch and feel gifts before purchasing them, and 46% said they will miss the serendipity of unexpected gift finds.

With in-store shopping still down, the idea of leisurely browsing needs to adapt to ecommerce. This will happen through website layouts and pop-ups, but also through personalization of communications across digital channels. Understanding what types of items shoppers are looking for – fueled by loyalty programs – will enable merchants to provide tailored recommendations to each customer wherever they engage with the brand.

Personalization for the Unknown Customer

The rush of new customers online earlier in the year means retailers are providing offers, messages and experiences based on very little individual data. Retargeting those new users around the holiday shopping season can be difficult with such little historical data.

Similarly, new customers acquired during the holiday shopping season will be the key to fueling sales throughout 2021.

Retailers can compensate for the small amount of historical data they’re working with by understanding similar customer habits based on transactional and behavioral information and using lookalike targeting. Merchants’ ability to do this effectively will be crucial in deciding whether or not those March-May shoppers return for the holidays and how many holiday shoppers become loyal customers over time.

Retail in 2021 and Beyond

Many of the longer-term impacts of this holiday season will depend on the strength of retailers’ customer loyalty and data-driven engagement efforts.

For smaller retailers, it will be critical to find ways to bring the experience their loyal customers are used to online. Larger retailers need to prepare for the increased disruption these small players bring to the table. Merchants also need to adapt in-store activities like browsing the rack and engaging unknown customers to the digital experience.

While this holiday shopping season will be a testing ground for ecommerce in many ways, there are several opportunities for merchants to capitalize on these emerging trends to set themselves up for long-term success.

Christine Sullivan is Director of Product Development at SessionM, a Mastercard Company

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