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The most wonderful time of the year? Retail’s biggest stress test unwrapped as Salesforce data indicates big changes for the Holiday season

Stuart Lauchlan Profile picture for user slauchlan October 9, 2020
The Holiday season is almost upon us and at the end of an extraordinary year retail resilience is about to run into its biggest test. Here's what might happen...perhaps.


At diginomica we’ve tracked closely the response from and impact on the retail sector of the COVID-19 pandemic. It’s been a mixed bag - some stories of resilience and innovation in the face of an unprecedented crisis, other tales of panicked reaction and inability to cope with a radically-changed environment in a sector already divided by enormous disruption. 

Looming large is the Holiday season, traditionally the most crucial period of the calendar for most retailers, with Thanksgiving in the US, Amazon Prime Day, Black Friday, Cyber Monday, Christmas et al.

Also coming up is yet more COVID-19, the threat of further local lockdowns and ongoing health and safety concerns on the part of consumers. All of this creates a febrile melting pot for retailers in 2020. In short, this Holiday season brings challenges as never before for retailers and is likely to test resiliency to breaking point for many. 

Against that backdrop, Salesforce has just released some predictions about what might be expected in the closing months of the year based on data gathered from “over a billion global shoppers”. Some of these can be classed as ‘safe bets’ based on even a casual awareness of retail trends this year; others raise some points that will be interesting to track as they play out. 

The following is a summary of what the Salesforce data indicates, articulated by Rob Garf, VP of Industry Insights for Retail and Consumer Goods, Salesforce, followed by diginomica’s take. 

The digital footprint will grow even bigger

Salesforce data says:  Salesforce predicts that after taking two decades to get to 15%, over the 2020 Holiday period 30% of global sales will come via digital channels, while in the US alone that percentage could be as high as 34%. Garf says there are a number of factors at work here: 

One of them is new digital consumers that are adopting this behavior for even categories that they would never think of in the past, like grocery and essential products. We also are seeing a large spike in digital traffic over Cyber Week. We project that we will see a 28%, increase in traffic. Let's face it, the yesteryear of standing outside on Black Friday to get your doorbuster in large part really goes away. Retailers don't necessarily want the volume and consumers don't want it either. 

My take:  This one falls into the ‘safe bet’ category, of course. After the events of this year, any other prediction would be what raised eyebrows, not this. My attention is caught by Garf’s comment about grocery being a category that people wouldn’t have thought about in terms of online shopping. That’s a clear reminder of cultural retail divides internationally. As we’ve noted many times, online grocery shopping has long been far more of an adopted practice in Europe, and particularly in the UK, than it has been in the US, which is playing catch-up here. 

Holiday demand will be pulled forward 

Salesforce data says: This is in part driven by Amazon moving Prime Day to next week, only a few weeks prior to Cyber Week, triggering an earlier uptick in spending than in previous years. Garf argues that this is in fact something that the retail sector has been trying to achieve for years, but has previously ended up playing a futile game of what he pitches as “discount chicken”: 

This is where retailers provide a steady drumbeat of discounts, but, consumers largely stay patient and ultimately get the largest discount in and around Cyber Week. In that case the consumers always win and it often cuts into the margins. But in this case, there's a real compelling event that we have  smacked down in front of us and that is Amazon Prime Day. 

The shift of dates by Amazon will, estimates Garf, pull forward around 10% of overall demand, equating to $26 billion globally. As well as the Amazon factor, there are other reasons to expect that shoppers will be opening up their wallets earlier this year, he adds: 

First of all is product scarcity. We all lived through the first half where we couldn't get some essential products. Second is shipping concerns. Shipping containers and packages were delayed and that will be on the minds of the consumers. And lastly, certainly, health concerns. Consumers are going to be worried about their health and wellbeing and want to shop early in the comfort of their own home. 

My take: Shop early for Christmas! I can relate to this one. Normally I have a pathological resistance to even contemplating the existence of Christmas until December, despite the annual appearance of mince pies and Christmas puddings in UK supermarkets from around the end of August! But this year, having experienced online fulfilment issues over the past few months, I have found myself ordering gifts already. And talking of fulfilment…

The ‘last mile’ becomes make or break 

Salesforce data says:  The prediction is that the sharp increase in digital sales will put significant strain on the carrier and delivery system. The Salesforce data anticipates a 5% over capacity demand for traditional carriers, which may not sound particularly large, but translates into an estimated 700 billion packages that could be at risk of being delayed in transit. If that includes your animatronic Baby Yoda, you're not going to be happy! Add to that the trend among carriers to add surcharges onto retail business as well as shipping caps and major issues loom.

Garf predicts that retailers will seek to create earlier demand for shopping to ease pressure on delivery. There will also be more reliance on new fulfilment options, such as non-traditional third party carriers - Uber Eats, for example - , as well as more collection/pick-up by shoppers, he suggests:

[This] is utilizing the store associates as not only package shippers, but also delivery experts. This becomes extremely important as well to find a cost effective way to get the products to the doorstep. We are also seeing, as we witnessed this first half of the year, using the stores as fulfilment centers to allow the consumers to pick-up the product, whether that is in the store or most likely will be a curbside or drive thru. Our estimation is that 90% year-over-year growth will be realized by those retailers that offer this capability. Retailers must move from being scrappy to scale in order to fulfill the orders in a cost-effective manner. This is a nice way to outsource the ‘last mile’ to your consumers and I think they will reward the retailers that do this. They're willing to go that last mile in order for the confidence of actually having the product available and ready to pick up.

My take: The patchy performance of some of the mostly-frequently used delivery and courier firms by retailers leaves me hugely open to alternative options. The curbside collection option may be one better suited to the open plan US shopping mall environment than the European high street perhaps, but it’s a perfectly reasonable assumption to make that 2020 will be year of increased fulfilment options and it will be the retailers who tap into the appetite for this that succeed the best. 

The importance of being heard

Salesforce data says: There’s going to be a lot of noise this Holiday season, whether that comes from the fallout of the US election, the ever-closer approach of Brexit or the never-ending COVID updates. Among all this din, retailers need to be heard by their customers via relevant, empathic and transparent messaging. That can take the form of operational information - Where’s my order? What time will I get my delivery? - but also, given COVID pressures, an increased emphasis on social platforms. Says Garf: 

Another creative wave that we've been seeing all through this year is doubling down on social, not just for inspiration, but also purchases. [Social] is where a lot of consumers are hanging out with their friends, family and colleagues.  In fact we are predicting that 12 to 15% of orders on a website will be driven by social.  

There’s also a need to think in terms of “shopping at the edge”, he adds: 

From the beginning of time, retail was about pulling the consumer to our property. Now it's as much about pushing the brand to wherever the consumers are, not just for inspiration at the top of the funnel, but also embedding the buy button to break down that friction between inspiration and purchase. Whether that's Valentino introducing their fall line on Animal Crossing or Old Navy essentially trying on products that isn't happening in the dressing room but on TikTok, or providing Instagram shopping directly in the context of the social media platform, we're all hearing about live streaming. Really, that's the home shopping of our generation. These are, by and large, the department stores for our generation, where there's demand, where there's excitement, where there's inspiration and yes, where there's traffic for these platforms to monetize and make purchases. We're going to see that in earnest this Holiday season.

My take: I had an issue last week that chimes well with the transparency discussion, when inept courier firm Hermes failed to deliver a package, then sent 3 conflicting messages -  lies? - to cover up its inadequacies, so I totally relate to the importance of communication. Hermes also managed to fail completely on social, only responding to messaging on Twitter 3 days after I raised a complaint and then only to reply with a standard ‘How can we help?’ message and zero follow-up. The idea of retail at the edge is an intriguing one and a theme that I suspect we shall be returning to a great deal in 2021. 

A big spike in returns

Salesforce data says:  This is a theme every Holiday season. This year Salesforce data predicts $280 billion of orders being returned. Consumers who’ve bought remotely have to approach their purchases in a different way, says Garf, and retailers need to take action to adapt: 

Consumers aren't as confident with the fit, with the color, with a look, so they'll buy the product they think will fit, and then they'll buy the product that's one size higher, and one size lower and they'll return it. So what retailers are doing is doubling down on the product detail. The product detail page is a cool new or revamped investment that we haven't seen for quite some time. They're taking the playbook from China. Those retailers that operate digitally in China providing a lot of detail, really proactively coming down on the likelihood of returns. 

My take This has been one of the emerging themes of the retail sector for some time. Back in 2017, Walmart made ease of returning goods a competitive differentiator, while more recently poor old Kohl’s has tried to alleviate its own problems by re-inventing itself as an Amazon returns depot. Personally I only ever buy clothing or shoes from an online retailer if I know that the cut and the shape offered by that firm will fit me. Trying to ‘guess’ with an unknown retailer is a gamble that I don’t want to take. That said, this year will have driven more and more people online to make purchases that they wouldn’t have done in the past so the demand for return capability - and the ability to make the process as easy as possible - will be something that marketers will want to play up, but also seek to avoid returns by making as much detailed information as possible available to buyers before a purchase is made. 


Salesforce data says: While electronics is always a hugely active product category, the impact of COVID and the shift to working from home, combined with lockdown and shelter in place provisions, means that there will be fresh emphasis on other categories this year. Garf says: 

As a theme it revolves around health, safety, and fun. What can you do when you're with your family to stay healthy and have some fun?  As it relates to electronics and gaming, you'll see also a large spike in digital products. If you think about the uncertainty around shipping product scarcity, that [postal] cut-off date happening earlier, a great way to (a) extend the Holiday season, and (b) have the confidence that a product or gift will actually get there is digital, whether that’s gift cards or digital games or the like. 

My take: As someone who has always regarded giving gift cards as a mark of failure of imagination, this is likely to be one of the most significant behavioral shifts for me this Holiday season. The idea of trailing around department stores to select gifts, then standing in line at the Post Office to send them off feels like something that, at this point as COVID transmission numbers go up and up, isn’t going to happen. So Amazon and Apple vouchers look like a pretty tempting option for nieces and nephews. 

My (overall) take

It’s the most wonderful time of the year…except this time it it might not be. Bah humbug! Retail’s taken a pounding from COVID and retailers across the board desperately need the Holiday season of 2020 to be a success, otherwise many of them won’t need to be thinking about planning for the same period in 2021. As an industry, retail’s been through a lot, pre and post the onset of the pandemic, but the real stress test is about to begin. Happy Holidays from the diginomica Grinch! 

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