- We quizzed 62 finance and nonfinance executives about their holiday 2020 outlooks.
- Panelists were spread across the supply chain, from manufacturing to selling.
- One commonality: The road to success leads through ecommerce and D2C.
As the 2020 holiday season approaches, retailers, distributors and manufacturers are nervous — with good cause. The air is filled less with the chatter of happy shoppers, more with unknowns and unique circumstances.
Even the unknowns have unknowns. To wit: There could be a second COVID-19 wave, but no one knows for sure. If there is, we know which government actions helped us weather the first wave, but will the same tools be brought to bear? Good question.
Whether you’re secure or shaky in your confidence level, you’re in good company. We noticed a dearth of holiday data for this year, so we pulled together three panels from our Brainyard audience, one each for retail, wholesale distribution and manufacturing. We asked about expectations for the season as well as concerns and tactics for success.
Because our panels were small, we can’t project to the market as a whole. But we can tell you where there was consensus and how plans are shaping up.
Our retail panel consisted of mostly smaller retailers; 63% are under $10 million. A few have annual revenue of $10 million to $50 million, and one is in the $100 million to $500 million range. Panelists were half finance team managers, half nonfinance managers. And interestingly — we didn’t plan it this way — all but one are having a good year, with some telling us their businesses are up by more than 20%.
We know that’s not typical, so their insights should be taken as coming from those managing well through the pandemic. And even for this group, it’s not all smooth sledding.
5 Biggest Retail Concerns For 2020 vs. 2019
|Stat watch: 80% or more of our panel said each of these items is much more or somewhat more concerning:|
|1. Forecasting demand|
|2. Obtaining adequate stock|
|3. Keeping staff and customers safe|
|4. Managing shipments|
|5. Managing the in-store experience|
Expectations for holiday sales were just slightly lower than for the year as a whole, but all of our panelists were at least somewhat confident about their prospects. All but two had established ecommerce channels by 2019, and last year these channels drove between 25% and 100% of sales, with an average of 45%.
This year, the group expects just a small uptick, to about 50% of sales coming from ecommerce. The two who didn’t have ecommerce channels last year have put those capabilities in place, and both expect about 5% of total sales to come from online.
We asked, “What’s more concerning this season versus last?”
Top answers? Forecasting, obtaining adequate stock and keeping customers and staff safe. Almost everyone said they placed orders early in an attempt to reach and maintain desired stock levels. That meant depending heavily on forecasting.
While “attracting customers” didn’t bubble up as a top concern, the marketing methods used for customer acquisition are clearly shifting toward the internet: Use of social media, online advertising and buying search terms were all top of mind, with over half indicating they’d use those channels more than in the past.
Direct mail, radio and TV are all down this year, or were never in the budget. Email marketing will be either steady or used somewhat more than in the past.
Holiday Retail Marketing: What’s Gold vs Old
|Stat watch: 60% to 70% of our panel say they'll use social, online ads and search terms more this year than last. Where’s that budget coming from? 10% or fewer will use more direct mail, radio or TV; 90% will use email the same or more than last year.|
|Gold: Social media, online advertising, buying search terms|
|Old: Direct mail, radio, TV|
|Stable: Email offers and discounts|
The move to online advertising is already underway. In the early days of the pandemic, some large ad and keyword buyers took a break because they had more business than they could handle. That situation has largely righted itself, and prices are going up.
Our advice is, move fast: The more shoppers who discover your brand early on, the better, so jump on ecommerce trends that can drive awareness. In fact, beating those online price bumps by front-loading ad spend is one of our five top tips to help small retailers win in 2020.
The 2020 revenue performance of those on our distributors panel was more balanced. About half are doing better than in 2019, half are doing worse. Those earning less report that business is down significantly; however, their expectations for the 2020 holidays were less downbeat than for the year as a whole.
Likewise, those who report doing well through the year said they’d do just slightly better this holiday season compared with last. Interestingly, this group was not particularly upbeat about the season, with only a few claiming to be “very confident” of success.
3 Big Wholesale Distribution Concerns + 3 No-Worry Areas
|Stat watch: 70% or more of our distribution panel cited these concerns, while 30% or fewer cited “no worries” items.|
|Concerns:||1. Forecasting||2. Obtaining adequate stock||3. Supply chain disruptions|
|No worries:||1. Logistics||2. Managing ecommerce||3. Managing returns|
The early pandemic-driven shutdowns clearly affected distributors. They’ve recovered some ground, but by no means all of it.
Business coming in through ecommerce and EDI is up about 13% year-over-year for the group. Only one panelist’s business didn’t rely on electronic orders at all, while the rest saw anywhere from one-quarter to about 88% of their business coming in electronically. Most had some form of direct-to-consumer channel — half said D2C is a major part of the business.
Forecasting demand and supply chain disruptions were among primary concerns for the group, along with keeping staff safe and productive, meeting delivery demands and attracting customers. Managing returns — a complex problem — as well as ecommerce technology and logistics were about as much of a concern this year as last.
7 Ways to Optimize Inventory, Supply Chains and Operations for a Holiday Season Unlike Any Other
Forecast uncertainty + potential order volume increases = stress on your
entire supply chain. How to cope? To start, stress test everything, from
your website to your supply chain to pick, pack and ship operations.
Here are more ideas to implement now.
About half of our panelists mentioned marketing concerns, in line with retailers. Others are thinking a lot about staff safety, budgeting and forecasting and maintaining adequate supplies.
Our distributor panel tended toward smaller businesses, with 60% driving less than $10 million in annual revenue last year.
Business for our manufacturers was mostly down for the year. Just 15% reported upticks, with another 15% staying level and the rest reporting that their sales contracted compared with last year.
Mandatory business closures in March, April and May clearly hit these companies hard, as it likely did for some of our distributors.
Still, manufacturing panelist expectations for the holidays are fairly upbeat, with 30% anticipating a much better year than last, 30% saying business will be about the same and the remaining 40% expecting to be slightly down versus 2019.
While distributor panelists told us that 2020 holiday business looks better than the year overall, there wasn’t a lot of assurance. Only a few were very confident, with the vast majority saying they are either somewhat confident, not so confident or not confident at all, in about equal numbers.
Just over half have direct-to-consumer channels, and interestingly, this group is less confident about holidays success than those who don’t have D2C outlets. This despite saying that their ecommerce businesses would be up about 40% from 2019, representing about one-third of holiday business overall.
3 Big Consumer Manufacturing Concerns and 4 No-Worry Areas
|Stat watch: 70% or more of our manufacturing panel cited these concerns, while 30% or less cited “no worries” items.|
|Concerns:||1. Supply chain disruptions||2. Forecasting demand||3. Attracting customers|
|No worries:||1. Returns||2. Managing ecommerce||3. Keeping staff safe||4. Meeting delivery demands|
This group said that in 2019, about 11% of business came through ecommerce or EDI; this year, they expect nearly double that, at 20%.
These numbers are skewed by one participant whose ecommerce business went from 45% to 90% of overall sales. It might seem like the firm hit on a great way to expand its business, and it did — it expanded its D2C play significantly. However, leadership remains much more concerned about supply chains, finding customers, forecasting and managing ecommerce than it was last year.
There are still plenty of ways for the holidays to not go as well as projected.
Overall, manufacturers are much more worried about obtaining materials than they were in 2019. They’re also concerned with forecasting and attracting customers. As a group, they’re just slightly more worried about keeping staff safe, meeting delivery guarantees and managing ecommerce and returns than they were in 2019.
What the Experts Say
A quick minute on your favorite search engine will reveal that expert insights for 2020 aren’t all that expert. They collectively say: Online sales will be up.
Thanks Capt. Obvious, your job here is done.
There are commonsense recommendations, like adding curbside pickup options for online shoppers. The rationale is pretty clear: A good fraction of customers don’t want to go into crowded stores, but they’re likely willing to get in the car to have their purchases in hand. Meanwhile, major shippers like UPS, FedEx and USPS are all adding holiday-related fees, with some of costs going up dramatically. In fact, shopping around for the best shipping rates is one painless way to save money now.
If you can get a customer to your curbside, you’ve used your retail real estate as a delivery point, kept foot traffic down, gained an opportunity to demonstrate excellent service and avoided having to pass shipping rate increases on to customers. The curbside riff on BOPIS (buy online, pick up in store) is growing for good reason.
What We Say
We’re consumers like everyone else. What’s on our holiday shopping lists? We compiled a mini panel of our Brainyard staff and contributors and see demand rising for:
- Comfy clothes
- Items to entertain the kids that don’t involve screens, and ways to make distance learning more fun and effective
- Gear and goods to be used outside
- Games and puzzles that everyone can play
- Cooking classes, and possibly meal kits
- Home office spruce-ups and items to make WFH more enjoyable
Plus, in case the above fail — and maybe even if they don’t — video games, cocktail kits and gift cards for streaming services.
Finally, there is still time to improve the ecommerce experience for your customers. We have tips, insights and methods to measure success. The goal: Prepare such that the unknown unknowns are less likely to trip you up.
Art Wittmann is editor of Brainyard. He previously led content strategy across Informa USA tech brands, including Channel Partners, Channel Futures, Data Center Knowledge, Container World, Data Center World, IT Pro Today, IT Dev Connections, IoTi and IoT World Series Events, and was director of InformationWeek Reports and editor-in-chief of Network Computing. Got thoughts on this story? Drop him a line.