Historically, December yields the largest profits for retailers, who are accustomed to ramping up their year-end operations to keep pace with the hustle and bustle of holiday shopping. This December, however, is a different story. As the recent surge of the COVID-19 pandemic forces businesses across Canada to close their doors once again, retailers must adapt to survive.
Consumer habits change overnight
Even the most avid shopper approaches this year’s holiday season with major concerns about health and safety. A growing number of consumers are opting to make online purchases from the comfort and security of their own homes. Retailers are ramping up plans for a transformed holiday shopping season in response to the COVID-19 pandemic, with strategies to draw buyers early, step up their e-commerce game and convince consumers to buy gifts for far-flung friends and family. A recent survey by Field Agent finds that 77% of Canadian respondents are very likely to shop online this holiday season. With major Canadian cities like Toronto and Edmonton sheltering in place, the demand for e-commerce is likely to continue to increase.
As shoppers gravitate toward online shopping options, their spending behavior is also changing. Financial insecurity has forced many Canadians to dip into their savings and live on a lower average income, which translates into lower spending on holiday gifts across the board. With greater budget constraints, more consumers will opt for non-traditional gifts that build relationships and improve the health and well-being of loved ones. The outbreak of COVID-19 has catalyzed a significant uptick in retail sales in the food, health, and wellness sectors, as well as home entertainment, with safety and convenience being key factors in their purchase decisions. From meal kit services and streaming subscriptions to at-home gym equipment and vouchers for future travel, holiday gifts will take on a more practical, experiential nature this season and center around improving the life and health of friends and family.
Retailers pivot to reach consumers
The most adaptive retailers must pioneer new strategies to reach consumers in an era of empty parking lots and quiet shopping centres. Smaller retailers, in particular, will only be able to compete with larger players by launching online stores and offering delivery and curbside pickup options. The sudden shift to e-commerce presents significant challenges, especially when it comes to managing inventory and accurately updating product availability online. Even retailers who are early to adapt their business model must keep a careful eye on cash flows and establish a clear strategy to weather the next stage of the pandemic. Through leveraging data analytics tools, they can identify previously untapped business opportunities and ways to restructure capital arrangements to ensure long-term viability. Only those that are able to quickly pivot and stay on top of changing regulations and consumer trends will be able to do well this holiday season.
Retailers of all sizes will find a supportive partner in institutions of higher education like McGill University, whose Bensadoun School of Retail Management works closely with industry leaders to provide practical insights into consumer behaviour, turnaround management, omnichannel retail, and other key drivers of success in today’s retail landscape. As the Bensadoun School sends the next generation of leaders out into the retail industry, they will bring an innovative, inter-disciplinary approach to leading the industry through the pandemic and beyond.