Holiday spending to take a Covid-19 blow this year

21 December 2020 Consultancy.eu

Holiday shopping has taken a back seat in 2020, as consumers in key markets grapple with Covid-19’s impact on life and the economy. A new Capgemini report rounds up the consumer trends this Christmas.

The comprehensive study is based on surveys with over 7,500 consumers in ten markets, including the UK, the US, Germany, France, Spain, Netherlands, Sweden, Finland, Norway and Denmark. The goal: to map consumer behaviour in the first holiday season since the global spread of Covid-19.

Few could have predicted how Christmas 2020 would pan out. Towards June when lockdowns were lifting, many were positive that things would ‘normalise’ by the end of the year. Even 45% of retailers in Capgemini's study expected an increase in sales in December. In reality, nearly 40% of consumers are spending less on holiday shopping this year than the last.

Holiday spending to take a Covid-19 blow this year

Spending cuts

Second waves forced new restrictions on mainland Europe, the UK went into another lockdown, and the US continued to see soaring case numbers. Against this backdrop, holiday traditions such as a visit to the decorated city centre or a dinner with the extended family are simply not possible, giving consumers little reason to make a purchase. A fifth of Capgemini’s respondents cited these reasons for shopping less.

Even for those who can visit shops and family, the state of the economy prevents any real splurge. Job and revenue losses have put a strain on disposable income, causing consumers to buff up their savings accounts. Nearly 25% avoided the shops for income reasons, while nearly half of those who couldn’t avoid the trip limited their purchases to essentials.

Clothing, personal care products and electrical items made up the majority of purchases, while bargain hunting was top of the priority list. For well over 30% of consumers, discounts were the biggest factor in their decision-making. In fact, nearly the same amount actually ended up buying something they weren’t planning to only because of a discount. Around 20% are still holding out on their purchases, in hopes of a better deal.

Online boom

Facing the brunt of these spending crunches is brick & mortar retail. Online shopping, meanwhile, is enjoying unprecedented growth. All consumers who are either banned from visiting the high street or weary of the infection risks are turning to ecommerce, driving adoption rates through the roof.

Nearly half of all consumers bought more online this season than ever before. In fact, more than 25% had never shopped online before, but have now warmed to the idea. Between 45% and 50% have grown more comfortable with the online format this year, and will continue their online consumption in the future.

Silver lining for the high street

One might assume that this combination of factors spells doom for brick & mortar retail. Yet, a key realisation for consumers has been that a visit to the shops around Christmas is a cherished holiday tradition – one that 60% of consumers would like to resume once the pandemic is over. Many are even more inclined to shop local, spelling promise for the neighbourhood retail stores.

“While it’s been a year of challenging adaption and experimentation for retailers, there is certainly hope for a resurgence as we settle into the new normal. Physical retail has a long-standing place in the hearts of consumers and they will return to stores when they feel it is safe to do so, but the pandemic has also exposed retail to new customers who hadn’t previously shopped online,” noted Capgemini’s Global Head of Consumer Goods and Retail Tim Bridges.

One imperative for in-store retail going forth will be to move with the times. Many brick & mortar retailers responded to the Covid-19 infection risks by investing in new technology such as contactless and self-service. While keen to return to the store after the pandemic, 60% of consumers want this tech to be a reality in the new normal as well.

According to Bridges, this is not the only lasting pandemic-induced change to consumer behaviour. “Whether shopping returns to the old normal or embraces the new, retailers must continue to innovate and evolve. Understanding and anticipating customer demands is critical, creating experiences that feel safe, convenient and personal - whether online or in-store.”