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30-second summary:

  • The shift to online shopping was already well underway pre-pandemic.
  • Consumers are taking advantage of expanded service offerings to get the products.
  • Customers see digital and in-store as two facets of the same experience.
  • People are looking for brands to deliver instantly on the values they believe in.
  • In the absence of historic data, BI and search insights have become critically important.

Now that the holiday buying season is well underway, we’re seeing the extent to which the year of the pandemic—and its unusual consumer trends and behavior—is impacting the retail industry. While some of these trends could revert to historic levels post-pandemic, others will likely change retail into 2021 and forever.

The shift to online shopping was already well underway pre-pandemic, although no one could have predicted the speed at which adoption would increase over these past months. As digital accounts for an increasing proportion of purchases, retailers are being challenged to change their view of the online channel. It is not useful to perceive digital as a threat to their business – rather, digital complements and can even augment the in-store shopping experience.

With this in mind, where should retailers focus their efforts for the holiday season and heading into 2021?

Consumers are driving the swift shift to digital

According to the National Retail Federation, 59% of shoppers started their holiday shopping early this year. Analysts at Morgan Stanley estimate that overall Black Friday sales fell 20% from last year, with the decline in foot traffic overpowering healthy online sales increases.

Adobe Analytics says that consumers spent $9 billion online on Friday, a 21.6% increase from last year and the second-biggest figure for online retailers ever. The firm pegged online sales at $23.5 billion in the four-day Thanksgiving-to-Sunday period, up 23% from last year.

Although foot traffic was down for the weekend, consumers who made the trip weren’t there to window-shop. Craig Johnson, president of retail research firm Customer Growth Partners, told the New York Times that retailers experienced higher in-store conversion rates than usual and that he expects this trend to continue through to Christmas.

These weekend sales do not show the significant shift in when consumers are buying, the time frame between the third and fourth-quarter sales. The holiday shopping season historically starts in November and ends in January. This year, retailers pulled forward deals before Halloween, prompting early buying and created urgency for buyers to avoid shipping delays.

Fear and anxiety about the Coronavirus is undoubtedly the main driver of the accelerated shift to digital this year. The discomfort and potential danger of being packed in shopping malls and stores weigh heavy on consumers’ minds. In fact, four out of five Americans surveyed by McKinsey in October stated they continue to feel unsafe and have yet to return to pre-COVID-19 levels of comfort with “normal” out-of-home activities.

For many, this unease is overriding any remaining distrust of online shopping and payment methods.

Consumers are taking advantage of expanded service offerings to get the products they need. More than 34% of consumers say they are taking advantage of curbside pickup, and 41.5 % are using BOPIS (buy online pickup in-store) fulfillment methods, according to a September survey. Consumers are also booking a time online to shop in-store, without crowds, even outside of regular business hours.

A new phenomenon has emerged, thanks to online shopping: ROPO (research online, purchase offline), or web-rooming, a strategy now used by 82% of consumers. This is where a consumer begins their shopping journey online and completes the purchase in-store. ROPO disproves the long-standing retail-killing theory that consumers will visit retail stores to find and learn about products, then go online to buy them.

I shared more COVID-related digital behaviors that won’t be going away in 2021 in this recent column.

Simply put, customers see digital and in-store as two facets of the same experience. Retail channels are merging, and retailers need to embrace the omnichannel age by blending both together to create a strong, holistic presence in the physical and digital environments.

Revving up your ecommerce and mcommerce strategies

U.S. consumers are being mindful of their discretionary spending this year, and 84% of households plan to reduce their holiday spending. A recent survey found that 54.5% of consumers said they would reduce shopping visits, while 22.9% said they would not shop in stores at all. Optimizing for online and mobile shoppers’ needs is imperative.

Consumers aren’t betting on the world going back to normal, either. IBM found in September that 62% of consumers believe we will likely see more global pandemic events. As unpredictable emotions and events continue to influence purchasing decisions, retailers are being challenged to reimagine retail into 2020 as an omnichannel relationship rather than a series of transactions.

As you plan for this holiday season and the year ahead, think from the perspective of your customer: What’s in it for me? Consumers are looking for products that best fit their lives and unique circumstances. A recent survey of 1,000 US adults found that the vast majority of respondents (80%) want personalization from retailers. Hyper personalization solutions to satiate customers’ needs are a top priority, and we know that personalization delivers results. Research shows that when companies use data to create personal interactions with a large segment of their customers, it provides top-line results with these programs earning 20% higher customer satisfaction rates and a 10 to 15% boost in sales conversion rates. What’s more, those retailers that consistently deliver high customer-satisfaction scores earn returns three times higher than retailers with low customer-satisfaction scores. The residual benefit with targeted campaigns is that it can also reduce marketing and sales costs by 10-20%.

Personalization is a gamechanger, but do not forget the power of local search optimization. Since 18% of local searches lead to a purchase within one day, managing your local search SEO, Google My Business account, updating offerings, and delivering mobile-friendly websites still play an essential role to your customer today. Where and whenever consumers are motivated to shop, retailers need to be there.

And as traditional retailers figure out entry-level personalization techniques like coupons and preference upsell ads, they will be left behind with the acceleration of innovative retail experiences such as digitally-enabled stores, pop-up online stores, Facebook Live shopping, and more.

As the evolution of retail has picked up speed, search insights have become critical to business intelligence

It takes a great deal of business intelligence to power these interactions; to inform the personalization and rich shopping experience that constantly connected consumers expect. Yet retailers are struggling to plan for a season in which past trends and historical sales data cannot predict impending sales patterns. McKinsey recently found that 64% of consumers have changed the stores, brands, and the way they shop, making traditional data trends useless for retailers.

In the absence of historic data, search insights have become even more critically important. These are your closest digital indicator of the voice of customer, and we know those organizations that implement changes based on data analytics can expect to see sales margins increase between 8 and 25%. Search data and market intelligence will better inform retailers’ understanding of who their customer is right now, how they are spending, and what matters to them the most.

where is retail in 2021 headed - brightedge research showing COVID impact index

Source: BrightEdge Research

What are your customers telling you in their browsing behavior, search queries, and on-site behavior?

Customer experience & AI will drive success for retail into 2021

If you feel like you’re being pulled in all directions and need to be everywhere at once, you’re not alone. The pursuit of a seamless, frictionless customer experience cannot be achieved without the ability to monitor, actively listen, and then activate search insights at scale.

Scaling retail into 2021 will require AI-powered technologies, but having the right people in place to augment your tech is key. Retailers will benefit from the automation of repetitive tasks, for sure, but AI’s potential runs so much deeper than simple time savings. AI will help retailers increase sales, improve customer retention, and more successfully launch new products; in fact, these were identified as top benefits of AI-powered martech in a recent study.

Consumers care about the people behind the brand and what they stand for, too. More than ever, buyers are factoring brand ethics and behavior into their evaluation of products. People are looking for brands to deliver on the values they believe in, and 71% of consumers prefer to buy from brands that align with their values. This requires more than a well-written ‘About Us’ page. AI will be key to communicating and creating experiences that mirror these values, as well.

In 2021, AI will help retailers not only deepen their understanding of the customer experience but to optimize for it in real-time. Retail leadership teams and shareholders, as they gather around the boardroom table (or a video call) to review their 2021 plans, should be saying to themselves and one another: “Retail reimagined is our only way forward for survival.” If that reimagining means incorporating AI into your marketing organization for the first time this year, you’ll want to read this column on setting your first AI project up for success.

Jim Yu is the founder and CEO of BrightEdge, the leading enterprise SEO and content performance platform.

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