Will Covid steal Christmas?

Holiday season is fast creeping up on us and retailers are already in the midst of planning for their busiest shopping period whilst still grappling with the business consequences of a global pandemic. With the threat of a second wave and subsequent lockdown that could catastrophically collide with peak shopping season, Covid-19 could present an even bigger challenge for retailers the second time around if  they are not prepared.

There are really two separate questions that affect the success of the upcoming peak:

  1. Will consumers spend less this year than in other years?
  2. How will consumers spend if they do choose to spend?

To answer the first question, it’s safe to say that with unemployment – predicted to hit 2.5 million in the UK by Christmas, and gloomy economic forecasts, it’s likely that consumers will be more cautious in their spending this year. However, consumers will still spend money over the holidays, so as a retailer the question is really, how will they choose to spend? and what needs to be done to maximise your share of that spend?

Regardless of the state of stores as we head into a possible second wave, online shopping will be significantly higher this year than in any previous year, possibly as much as 100% up year on year, and in particular there will be a significant increase in click & collect options, which digital consumers have gravitated heavily towards – over 30% of UK respondents in the Publicis Sapient Digital Life Index Report said they preferred to order online and pick-up in store over other fulfilment options. Retailers need to be ready for this surge, and ready to meet this increase in demand in a profitable way by shipping the right product from the right location. Otherwise, they will find that their bottom line – as well as their top-line – are eroded during this challenging time.

Back in March, the pandemic took everyone by surprise: customers went into panic buying mode, distributers struggled to find staff, and retailers scrambled to open new channels. Although in many cases the supply-chain was full, the challenge was in finding ways to get the right product to the customers, when and where they wanted it. However, ambushed by the shock of a global pandemic, customers were understanding of the challenges that retailers were going through, and just happy if they could get the things they needed. If a second wave does hit, already fraught Christmas shoppers are likely to be much less forgiving to retailers who don’t, literally, have their ‘shop in order’.  

This time around, there will be less panic buying, and its likely consumers will start their shopping earlier – as early as September – as confidence in delivery times fell during the first half of the year. In addition, by now, customers fully expect to be able to buy products from their favourite brands online, and if they can’t, they’ve simply either learnt to live without them or found an alternative brand that can deliver on their needs. Come peak season, if items aren’t available in the way and timeframe that consumers want, they will switch faster than ever before. Coronavirus has tested brand loyalty to the limits.

In customers’ eyes, having had six months plus to adapt and prepare, retailers should have ironed out any friction points on their online platforms – found ways to get online if they weren’t already, and crucially, sorted out their delivery processes to allow for quicker, smoother delivery for a period where time really is of the essence.

The reality for retailers is far from that. Six months, while scrambling to run the day-to-day business in crisis mode, is not a long time for retailers to have fixed what are essentially systemic problems in their online, inventory, and fulfilment processes. Whilst surface changes have been made, there hasn’t actually been enough time to address many of the underlying infrastructural challenges since lockdown 1.0. This leaves retailers, especially the larger and less nimble ones, exposed and vulnerable.

There is a lot to worry about in the world of retail; however, as a priority, to ensure that they maximise the peak shopping period, using it as an opportunity to recoup some of the losses from earlier in the year, retailers need to focus now on: activities that build a strong digital presence that manifests their brand; hardening of systems that will need to support the likely increased demand; and, most importantly, build flexibility into their overall supply-chain to allow them to adapt and shift as consumers buying patterns change, for whatever reason. Inventory visibility is key, as well as flexible systems that allow them to action stock in different ways, such as driving sales through online or in-store; shipping it to locations in regions where stores are open; omnichannel promotion and discounting and, as a final option, enabling sales on third party marketplaces.

Whether Covid will steal Christmas is yet to be seen. Retailers who are able to respond quickly, with a robust eCommerce presence and the flexibility to adapt and improve will win out. Retailers need to be preparing now by taking a more digital first strategy, enabling them to respond with agility to any inevitable new surprises that a Christmas with Covid will bring.