Welcome to the final instalment of S.H.O.P., our series examining the changes in retail and commerce. Over the course of four weeks, we’ve been exploring some of the key topics around the past, present, and future of retail, looking at the technologies and behaviors that have enabled – and transformed – shopping as we know it.
This week, we’re looking at how this year’s holiday Present shopping could change retail forever. On the podcast, Dee Reddy talks to Forbes contributor and retail expert Sandy Stein, DPD Ireland CEO Des Travers and An Post’s Eibhin Eviston. Listen below, and read on for our companion post.
This has been a year unlike any other, and its holiday season is set to be just as unusual. With many stores still shut or working at reduced capacity to meet COVID-19 restrictions, retailers – and consumers – have had to move online to cater to the new shopping habits that have formed over the past nine months.
Throughout this series, we’ve seen again and again how the pandemic has accelerated retail trends that were already underway. But if global events have expedited the shift to ecommerce by five years (and they have), this holiday season is the crucible that will forge these changes from necessary-but-temporary adaptations into long-term transformations in the retail sector.
’Tis the season
Why is the holiday season so essential for retail and commerce? According to the National Retail Foundation (NRF), a US organization and the largest retail trade association in the world, roughly 20% of all retail sales in the U.S. come from the holiday shopping season – that is, between Thanksgiving and Christmas. In 2019, that translated to $729.1 billion. For many retailers, holiday shopping during this period also accounts for their largest chunk of annual profit, meaning that their overall success for the financial year is intrinsically tied up with their seasonal performance.
“Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year”
This year, the National Retail Foundation is forecasting that holiday sales will increase between 3.6 percent and 5.2 percent over last year’s, estimating a value of between $755.3 billion and $766.7 billion in total. Of that, they expect to see a major increase in online and “other non-store” sales of between 20 to 30 percent – ultimately accounting for between $202.5 billion and $218.4 billion of the total value.
So it’s fair to say that the holiday season is an economically significant time. But for consumers, it’s an emotionally significant one, too – and particularly this year. The NRF’s statement acknowledges the “psychological factor” that will likely be at play in shoppers’ minds this year, with its President and CEO Matthew Shay saying: “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year.”
Writing for The Atlantic, journalist Amanda Mull notes the importance of tradition and ritual in a year when so many things have already been upended: “Buying not just gifts, but decorations, sweets, and the trappings of a Christmas feast are deeply entrenched customs, and many Americans will want to hang on to those rituals in a world where so much else has been disrupted.”
Overall, it seems that initial fears of a major downturn in holiday spending have been assuaged. This is thanks in no small part to what Vaughan Fergusson, founder of Vend, last week called “the absolute resilience of retailers,” many of whom have been making major strides in adapting to business-as-unusual. But it’s also about an increased understanding from consumers about the role of retail in their lives – and in their communities.
In this respect, Sandy Stein, author of Retail Schmetail: One Hundred Years, Two Immigrants, Three Generations, Four Hundred Projects, a first-person account of the history of US retail, believes that this year’s holiday season is going to be an anomaly, but ultimately a revealing one.
“I think as we look at the things that we’re truly valuing now, authenticity is among one of the top emotional values. We really want to buy things that are genuine, that are grounded in quality, in originality, and craftsmanship”
“I think that the kind of expenditures, the kind of things that are going to be celebrated and purchased over the holiday, are going to be really anchored in family,” Stein says. “They’re going to be anchored in things that really mean something, are of value, that they’re going to be experiences that are part of that wish list.” Looking to the future, he suggests:
“I think there’s going to be less amounts in terms of quantity, greater value in terms of quality, and coming back to what is truly meaningful to people. I think that begins to tell a broader story about what’s going to be successful moving forward, the kinds of businesses that are going to be successful moving forward.”
Since the beginning of the pandemic, Stein has also seen a renewed emphasis on locality, personalization, and authenticity. “I think as we look at the things that we’re truly valuing now, authenticity is among one of the top emotional values,” he says. “We really want to buy things that are genuine, that are grounded in quality, in originality, and craftsmanship.”
Back in episode one of S.H.O.P., Prof Rob Adams expressed a similar view about the future of retail. “I think the return of well-crafted quality goods will be dominant,” Adams said. “I don’t think people are buying as much. I think we’ve suddenly realized we don’t need as much stuff. […] If I buy something, I don’t mind spending more because I know it’s going to last me 10 years, rather than I’m going to change it in four months’ time because fashion has changed.”
Implicit in these discussions is an underlying shift in the way we think about retail within a broader framework of sustainability and community. According to a recent report by IBM, today’s buyers are willing to change their shopping habits to reduce environmental impact, and are even willing to pay a premium for sustainability.
“There’s such a big movement at the moment towards supporting local. We’ve really realized that from an environmental and just economic perspective, how important it is, especially with COVID, to continue to support those local businesses”
“Small is the new big,” Stein says. “That’s something that is going to be a refreshing change where it really will make a difference from one area of town to another, one town to another.”
Sheelin Conlon, owner of The Kind, an eco-friendly and sustainability-focused shop in Dublin, has always focused on these values, but has noticed them coming to the fore even more lately. “There’s such a big movement at the moment towards supporting local,” Conlon says. “We’ve really realized that from an environmental and just economic perspective, how important it is, especially with COVID, to continue to support those local businesses.”
For self-described “urban choreographer” Adams, these smaller, local retailers have a large part to play in the performance of the city overall. He talked about the sense of community that is fostered by shopping local (in his case, Melbourne, Australia):
“Around us are four supermarkets. So if I wanted to go to any supermarket, I could go. Have I been to many of those during COVID? No. There’s a little lady who calls herself the Rose Street Pantry, and she’s got most of what I need. […] She’s got a little French baker who bakes bread and actually now delivers it to us in a brown paper bag with some old twine around it and a flower in it with a message on the packet: ‘To Rob and Rosie.’ And the intimacy we’ve found in dealing with someone on that small scale is something we really enjoy.”
Wrapping everything up with a bow
Whether at local or enterprise level, this year has highlighted the importance of strong, personalized relationships between businesses and their customers. Talking about how COVID-19 has given us a new and clearer understanding of what we want from retail, Stein says:
“The onset of this profoundly disrupting element through all of our lives has forced a reckoning of sorts, or a clarification of the importance of trust between the consumer and the retailer. The retailers that have survived, and those that will probably proliferate and win in the long run, are doing so through transparency, through creating a customer relationship that is built on trust.”
Expanding on that idea of trust, he says: “I think going forward, we’re going to see the fact that customers are comfortable with dealing with businesses that are like-minded, that are investing in the community, that are giving back, that are placing a priority on how well they’re actually paying their salespeople, how well they’re being responsible in terms of being a sustainable employer.”
“For the retailers that truly invest in their customers, it will be the gift that keeps on giving”
In many ways, Stein argues, this is a return to “traditional” ways of doing business. He calls it “clienteling,” referring to the way department store staff would build ongoing, personalized relationships with the shoppers at their stores, learning their tastes and preferences as well as their needs and objectives.
We’ve seen the return of this philosophy already throughout this series; for example, it’s present in the approaches of Michelle Curtin, Head of Personal Shopping at Brown Thomas, and Colin Harmon, founder of 3fe coffee, both of whom talked to us in episode two.
But what’s different about it now is that it’s underpinned and supported by new technologies that enable retailers to, in the words of Stein, “reinvigorate that bond between the consumer and the retailer” across multiple channels, both online and offline. And for the retailers that truly invest in their customers – in understanding their values and growing their relationships with them over time – it will be the gift that keeps on giving, in 2021 and beyond.
Original artwork for this series was created by self-taught artist/illustrator Elijah Anderson. You can find out more about his work here.