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This peak shopping season is like no other in recent memory. Against the backdrop of a global pandemic, supply chain disruptions and rising costs, retailers could be forgiven for having a degree of apprehension about Black Friday and the coming months.
However, our survey of 8,500 consumers and 1,000 retail merchants in the UK, Germany, France and Spain paints a more positive outlook.
The data unsurprisingly finds several challenges are causing disruption to operations this Black Friday. But, it also reveals an abundance of opportunities for those retailers focused on meeting evolving consumer demand and optimizing their payments infrastructure.
Retailers raise valid concerns in a volatile environment
After operating in a volatile environment over the past few years, it's no surprise retailers tell us they have worries about how the current climate will impact Black Friday and the rest of the peak shopping season.
One core concern is shipping costs, which 40% of retailers say is significantly eroding their margins. Supply chain issues are another problem frequently cited. In particular, 30% of retailers worry about having adequate stock levels to capture the surge in demand for online shopping expected in the coming weeks.
Then there's inflation. A quarter of retailers say wholesale price hikes will inhibit their ability to offer discounts and Black Friday deals this year. Despite this, 68% are hopeful that consumers plan to spend more than they did in 2020. Following what was primarily seen as a ‘canceled Christmas' in 2020, there's expectation friends and families won't allow another year of festivities to slip through their fingers.
Peak shopping season begins earlier than ever
Retailers are breaking from tradition in search of revenue in the face of these circumstances. Over half of those we surveyed have invested in early marketing and sales campaigns to engage shoppers sooner. This play has yielded results, with 67% of retailers telling us they've experienced an early uptick in seasonal sales.
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This makes sense given 50% of consumers say they've started their seasonal shopping early. A trend encouraged by their own fears about stock shortages and shipping delays meaning that gifts won't arrive on time. There's also a desire to spread spending across a longer period as inflation impacts how much disposable income they have.
Consumer behavior is evolving to navigate the economic environment
The data reveals other interesting changes in consumer behavior. Specifically, the worries about stock shortages, shipping delays and cost are discouraging consumers from spending with retailers from overseas. Only a third of shoppers say they'll purchase seasonal gifts from retailers in the same country as the recipient.
This finding is in contrast to our research earlier in the year, which revealed consumers were becoming comfortable shopping with brands outside their home market.
In a more positive development, retailers might look forward to fewer returns this Black Friday. Sixty-six percent of those consumers we surveyed said they don't expect to return a single item purchased.
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Retailers recognize the importance of optimized digital payments
Every sale counts across Black Friday, Cyber Monday and the rest of the peak shopping season. Ensuring consumers can pay without complication is therefore critical.
As our previous research uncovered, consumers are sensitive to a poor checkout experience. They're more than likely to abandon their cart if their expectations aren't met, have security concerns or encounter a false decline.
To minimize that risk, 58% of retailers have invested in improving their digital payments and online checkout. This includes enabling more payment methods such as digital wallets, such as Google Pay and Apple Pay — which merchants anticipate 75% of consumers will use.
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Offering buy now, pay later (BNPL) options — which 49% of shoppers are expected to use — is another area of focus for retailers. However, it's worth noting that BNPL is not something they intend to use for gifting but rather for personal purchases.
Capture demand this peak shopping season
This peak shopping season looks set to be more complex than ever. But it's clear many retailers are tackling this complexity head-on with innovative go-to-market strategies and by using all the tools at their disposal to capture consumer demand.
