Christmas 2020:

Partner viewpoints

Raj Pattni, head of Market and Customer Insights, Barclays

2020 has been a year of uncertainty as the world navigated through the pandemic. Predictions on the digitisation of our economy were accelerated and consumer behaviour has shifted. It has become ever-more important for businesses to understand these shifts to be able to make informed, strategic decisions to navigate the changing conditions forming the ‘new normal’. 

We used the wealth of our consumer spend data aggregated from 250 million anonymised monthly debit and credit card transactions, tracking the actual spend of over 17 million customers to analyse the performance of different sectors of the economy over the golden quarter. Similar to any other year, there were those that did well and those that struggled. 

People’s homes became a place to sleep, a place to work and a place for entertainment. With more time spent at home and limited dining out options, it is no surprise that supermarkets and grocers enjoyed a superb quarter with double-digit growth, but it is worth noting that the data also shows that many consumers are turning to their local specialist food and drink retailers like butchers, bakeries, wine shops and such for their food and drink needs, showing the sustained sentiment of support for small local businesses. In addition, many opted to update their homes with home improvements and DIY spend showing strong performance throughout the quarter. 

Understandably, ecommerce retailers have enjoyed strong sales growth and impressive rates of new customer acquisition, but interestingly, many retailers did not see a spike in face-to-face sales when shops have reopened in December. This could suggest simply that consumers started shopping for Christmas gifts earlier than usual last year, but it remains to be seen whether consumers will continue to choose online shopping as we come out of lockdown.

As we are spotting new consumer behaviour trends, we still do not have a clear view of future behaviour in the post-Covid world. It is, however, clear that now, more than ever, it is vital to have quality information to be able to monitor the trends in shopping habits and changing consumer wants and needs, because keeping informed of these trends enables businesses to stay agile, which in turn can help them thrive even in the most challenging conditions. 

Warrick Godfrey, VP, Industry Solutions, Braze

This past holiday retail season was unprecedented in many ways but its long-term impacts are here to stay.

In 2020, retailers pushed trading earlier than previous years, and Braze saw a massive increase in communications being sent in the eight weeks leading up to Black Friday and Christmas, with a reduction in year on year marketing communication during those days themselves.

In an important strategic shift, retailers pivoted to a steady drumbeat of trading to create a more engaging customer experience as well as to protect an already stretched supply chain. Many brands saw an increase in customer acquisition during the first lockdown as consumers started to rely on ecommerce out of necessity.

Braze found that 83% of consumers said that they planned to shop online during the holidays as much or more than during the height of the pandemic, which is illustrated by a 62% rise in mobile acquisition as defined by new users coming into retail and ecommerce apps.

We also found that ecommerce customers increased their engagement with ecommerce brands. Across the Braze customer base, we saw a 100% increase in average spend per unique user throughout this past holiday season.

Looking forward to 2021, retailers should design campaigns now to deepen relationships with customers in the months leading up to the next holiday season. Building out effective onboarding and lifecycle marketing programmes will allow them to lower overall acquisition costs while increasing chances that customers convert to purchasers in the holiday season and beyond.

Hazel Morton, head of UK marketing, Critizr

Christmas 2020 tested the mettle of all British retailers in an almost unimaginable way. It is impossible to overstate the impressive agility and fortitude of retail teams in their response.

One of the big stories from the brands we work with is just how firmly retail staff kept their customers at the heart of everything amid all the change and operational flux. Local staff served their customers and communities with pride, empathy and genuine care, taking the initiative locally to do so. As we know, in times of crisis, people rely more on others. And the people we saw working at the frontline of retail didn’t let their people down.  

What we were seeing was customer experience being quickly reinvented around the UK, not by CX strategists but through the sheer determination and professionalism of retail staff to do the right thing.

From supermarkets restructuring store layouts and upping their ecommerce game, to fashion brands introducing virtual consultations and AR fittings, so many businesses pulled out every stop to deliver what their customers needed.  

This is a golden insight from the past few months in retail. At Critizr we call it Customer Obsession: a business culture where every member of staff makes the customer experience their number one priority; not just the people with a job that has ‘customer’ in the title.

In an industry where experience is everything, where digital is rising exponentially and traditional loyalty is declining, the pandemic has shown us that staying close to customers is the only way to thrive in what remains an uncertain future.

Andy Harding, UK managing director, Openpay

2020 was a year like no other, brutally wreaking havoc across the retail sector. With the unexpected interruption of a global pandemic, we saw the demise of high street stalwarts and shopping centre giants  – as spending habits altered dramatically and life in lockdown left a lasting impact on every single retailer. It was anyone’s guess as to how Christmas 2020 would unfold.

An unequivocal learning was the necessity of prioritising digital channels within a multichannel business. Even as online sales grew exponentially, too many retailers continued to put their energy and focus on footfall to their physical stores, which ultimately, proved disastrous for some.   

That said, the speed in which the ecommerce industry has adapted and innovated over the past year to serve consumer demands, most especially for Christmas and the entire golden quarter period, is unlikely to ever be replicated.

In such precarious times, I think it's under-appreciated just how successful so many retailers have been in growing and adapting to serve customers with so few issues.

With so many having to completely reinvent their business model, be it from addressing inventory limitations to embracing technology or focusing on choice, from payment method to delivery; these multichannel services were ultimately their saving grace and bolstered their online operations in the forced absence of physical retail.

Retailers will need to prove to consumers more than ever that they have the right products, the best technology and payment choice, making the consumer’s shopping journey both effortless and personal. At Openpay, we’ve seen a huge rise in consumers taking advantage of our seamless integration solution and also an increase in return customers, which is hugely positive for ecommerce brands.

What is evident is that the retail industry can be creative in reshaping itself and will continue to prosper. Brands have worked hard to create business continuity plans to help them be more resilient in future – and that’s something we can all be proud of.

Alison Lomax, lifestyle retail director, Google

The 2020 Christmas trading period demonstrated the acceleration of multiple retail trends. Sudden new restrictions, lockdowns and public nervousness of visiting shops brought forward consumer behaviour shifts to online that would have happened years from now, to today.

Retailers that had previously invested in their digital future as well as those that were able to rapidly innovate, adapted best to this step change in ecommerce. Observations from this peak season can help us learn lessons for the year ahead:

Earlier and longer season

The peak period continues to be an earlier and longer season, clearly shown by the demand from Christmas trees over the past four years showing there is a sizable pick up in festive retail from mid October onwards. More unique to 2020 was the incredible demand for Christmas pyjamas, as many looked for some festive comfort. A natural end to a year in which loungewear has seen significant demand within fashion. In grocery many opted  to purchase luxury items, with search interest for  champagne the highest it has been in the past five years. 

More online research

48% of non-food purchases made in December 2020 were made online, up from 32% in 2019. This increased reliance on ecommerce has led to even greater online research. The challenge for retailers is the increasing complexity when trying to capture these shoppers. In 2020, 84% of shoppers carried out online research  to support their purchases, versus 76% in 2019. This shift was largely driven by shoppers over 45 years old, with 80% of those aged 45-54 doing online research, versus 68% in 2019. A similar trend was seen among those over 55 years old, with 81% doing online research in 2020, versus 62% in 2019.

Increased competition

With retailers offering more promotions to win over shoppers, it’s no surprise that in the UK price (43%) was one of the top factors at the forefront of purchase decisions. However, availability (44%) was the most important factor of all. Convenience was third (36%), and speed fourth (33%). Balancing these four key factors will continue to be a challenge for all retailers over the next 24 months.

Lessons for 2021

Looking ahead to this year, we can hope that physical retail will eventually be able to trade with  less disruption. While at the same time it’s important to consider that the retail trends accelerated by the events of 2020 will not reverse, rather just re-balance themselves as restrictions are eased. Consumer expectations of the digital experiences they expect from retailers will keep growing. The digitalisation of retail has only just begun and will be a continued theme for 2021 and beyond.