Filippo Battaini (Head of IDC Retail Insights, Europe)

This year’s holiday season won’t be the same. There’ll be less travelling and fewer family gatherings, and holiday season shopping will not be immune to all of this. We expect many consumers to shop online due to lockdown measures or simply because they’re wary of visiting potentially crowded physical stores in the run-up to Christmas.

Rise of Digital Commerce

An increase in online shopping during the holiday season is nothing new. UK online sales were 15% of overall retail sales (excluding fuel) in November 2019 versus 10% in November 2015, and 13% in December 2019 versus 8% in December 2015, according to our analysis of Office for National Statistics (ONS) data. This year, we expect the percentage of online shopping in the two months to Christmas to increase even further.

Black Friday to Boost Online Spending

Given the restrictions in place in some countries, including the UK, Black Friday is expected to contribute substantially to the increase in online spending in the run-up to Christmas. This year, Amazon and other retailers are merging Black Friday and Cyber Monday into a 10-day shopping festival culminating on November 30.

This seasonal shopping spree was initially associated with images of long queues outside big-box retailers and rampaging shoppers grabbing discounted items as stores opened. Over time, this stampede has moved online, with websites crashing due to huge spikes in customer traffic.

John Lewis Christmas Comes Early

Retailers have been getting ready for the expected online shopping spree. UK department store operator John Lewis launched its first-ever virtual Christmas Store as early as September in response to an early spike in searches for festive items. The virtual store enables online shoppers to take a 3D tour around the Christmas shop floor of its flagship Oxford Street location and purchase the displayed items.

Source: John Lewis Virtual Christmas Shop (www.johnlewis.com)

How Retailers Can Prepare for the Virtual Holiday Season

The developments that have taken place this year have probably changed shopping behaviour for good. With the 2020 holiday season increasingly going online, more shoppers are likely to follow suit in the future to take advantage of the convenience of shopping online and to avoid crowded stores. According to the IDC Retail Consumer Insights Survey 2020, 73% of US shoppers’ spending takes place online, versus only 38% in pre-pandemic times.

Retailers need to adjust their operations to meet the complexity of today’s shopping journey, with greater integration across venues, whether online or physical. They need to enhance online operations, inventory management and fulfilment capabilities to lay the foundation of a retail architecture that can thrive in this new environment.

Retailers should leverage their brick-and-mortar presence to strengthen their fulfilment capabilities by using their store network to fulfil online orders. Effective integration of online and offline is increasingly important to provide a customer experience that responds to the greater complexity of today’s shopping journey.

 

During our IDC European Retail Executive Digital Forum 2020, we discussed about the importance of supply chain, fulfilment and the new role of the store with retailers. You can find more on how retailers are preparing for the next normal in How European Retail Can Win the Next Normal: Foundation Capabilities and Enabling Technologies, and if you want to know more/talk about these topics you are welcome to reach out to Filippo Battaini.

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