While holiday shoppers browse store aisles, wait in the checkout counters, and get carried away by the twinkling Christmas tunes, they often throw additional items into their baskets. A box of chocolates. A tube of lip gloss. Or the perfect gift for a friend or family member who was not originally listed.
This year, however, retail analysts expect impulse purchases to decline as consumers start shopping earlier, reduce store visits and search online for specific gift items during the coronavirus pandemic.
Impulse buying typically accounts for 25% of total vacation spending, according to The NPD Group. This year it is expected to return 18% to 20% – a potential loss of $ 5 billion to $ 7 billion in sales for the season, the market research firm estimates.
Marshal Cohen, chief industry advisor for The NPD Group, said the acceleration of ecommerce sales during the pandemic – which is expected to survive the global health crisis – will force retailers to tackle the riddle of encouraging impulse buying in an online environment. surroundings. He said the expenses “fit into the equation regardless of category,” but it is a particularly important sales stimulator for some merchandise such as beauty.
“What stores used to do is take advantage of the crowds, use the prices, use the floor to have products you didn’t expect to see in places where they normally wouldn’t be,” he said. “Without the in-store traffic, how do I navigate online to show you things you weren’t expecting to see? That’s the challenge retailers face today.”
That’s one of the factors that can reduce overall vacation spending, according to NPD. Shoppers plan to spend an average of $ 691 during the holiday season – less than the $ 740 they planned to spend last year, according to NPD’s survey of more than 3,400 consumers. Those surveyed said they plan to do about half of those Christmas shopping online this year.
Some stop giving gifts after losing a job or getting a pay cut. Others spend less because they are drawn to homemade or meaningful gifts and have a different outlook because of the devastating effects of Covid-19.
During the holiday season, retailers have used digital tools to recommend items to customers or encourage them to buy more. For example, at Walmart, the retailer has added a “Last Minute Deals” page on its website that teases fun items, from toys to small kitchen appliances, that shoppers can buy on a whim. Target has put together gift guides to provide ideas to shoppers who are dumbfounded or to introduce them to items they might not otherwise discover.
This holiday season, Bed Bath & Beyond has curated product collections that go together to encourage people to add additional items to their shopping cart. For example, it has a ‘Cozy Backyard Holiday Collection’ with pillows, copper mugs for hot drinks, candles and firepit – a range inspired by families, friends and neighbors who gathered outside to reduce the risk when they gather during the pandemic . The household goods retailer has also improved its website so that it loads faster and requires fewer steps to checkout – factors that can cause customers to click away and stop their purchases.
Many other retailers are testing other strategies, such as suggesting items based on where a customer clicks, showing clickable targeted ads on social media, or emailing them later when they leave an item in their shopping cart.
Ambo Bose, a chief practice officer at Fractal Analytics, said the artificial intelligence company is partnering with consumer packaged goods retailers and companies to reach customers in new ways – especially when they’re willing to make spontaneous purchases. . For example, he said the company has found that shoppers are more likely to buy chocolates and other candies on their smartphones when they aimlessly browse social media or shopping sites after lunch. That’s a great time for candy companies to run a retail ad at an attractive discount, he said.
Retailers have been trying to get better at recommendations by using ‘personas’ as well, he said. As they learn about a customer’s likes and dislikes through purchasing patterns, they can group them with similar customers and recommend items in a targeted email or a sidebar on a web page.
However, that comes with another pandemic-related challenge. Retailers have attracted new digital customers as shoppers download apps or try online services for the first time, such as roadside pickup. But they have less information to use.
According to an Adobe Analytics survey of more than 1,000 US consumers in October, about 9% of new online shoppers do not yet have a developed online store profile, such as an email address on retailers’ distribution lists. The company said this has led to a 10% drop in email sales during the holiday season.
Bose said encouraging additional purchases remains a puzzle retailers should focus on. Online shopping turns even some of the most basic shopping principles upside down, he said. Rather than an extended shopping path, retailers should draw shoppers’ attention to a product on a small smartphone screen. Consumers shop with a “searching and scrolling mindset”. And even after seeing an attractive item, they can quickly click away.
“Just putting it in the shopping cart isn’t enough,” he said. “While the shopping cart in the store is for buying and going to the checkout, the shopping cart online is more of a purpose for evaluation.”