Creative Channel Retail Research: one in a series
2020 has been a difficult year for nearly everyone on the planet. The necessary limitations that emerged on our personal and professional lives have taken a toll across all aspects of our life. But, as look a ahead to the remainder of 2020, our data shows shoppers are optimistically interested in a holiday shopping season where they treat themselves and the ones they love to meaningful gifts.
Regardless of the challenges of 2020, we believe that more than in past years, shoppers are committed to creating a holiday season for themselves and their family that is delightful. There are limited opportunities for experiences, so gifts are going to be central for this holiday season.
Over the past 6 months, we’ve seen dramatic shifts in purchasing behavior. At its peak in some categories nearly 90% of shopping moved to online. Now that stores are back open, online shopping is settling into closer to the 20-30% vs. in-store. Even still this is a 200% increase over the beginning of 2020. As a result, shippers are straining for capacity.
Ground shipments at Fedex* grew by 25% year on year in their second quarter. That means their Q2 2020 was nearly 7% higher than holiday 2019. Amazon and UPS are in positions where infrastructure and the last-mile supply chain to get goods to Shoppers is far outstripped by demand. Additionally, as evidenced by the more public conversations, the USPS is experiencing their own challenges with infrastructure.
That brings us to Holiday 2020: UPS and Fedex have both announced hefty surcharges (beginning at $1-$3 per package) to prepare for increased demands from high-volume shippers (based on volume growth against February 2020 volume baseline). Shippers see this as a pricing opportunity given the demands, but they also expect increasing costs to meet the anticipated spectacularly high volume.
The reality is that shoppers are going to see long lead times and shipping delays for their deliveries. With this, we expect stores are going to see more than expected traffic this holiday as shoppers see and anticipate these delays. Retailers are going to be destination points for shopping as well as picking up orders. This will be an opportunity for brands that are well stocked, well merchandised, well branded and with well-trained Associates to enjoy larger success with this surge of traffic.
*based on FedEx quarterly stats publication