Which retail categories are set to benefit the most from gifting this holiday season? How will spending patterns differ across age groups? Is everyone planning to shop online?
Covid-19 has made it hard to predict what peak season will be like this year, but a new report based on thousands of purchases across APAC from leading data-driven advertising platform Quantcast reveals the key trends and shifts.
We spoke with Quantcast’s head of marketing in APAC Rachael Townsley to find out her top takeaways from the report and what retailers need to know to make this Christmas merry and bright.
Inside Retail: What are some of the key ways Covid-19 has impacted consumer behaviour and spending this holiday season?
Rachael Townsley: Where do I start…? Covid-19 is being called the “digital accelerant of the decade“, fast-tracking e-commerce penetration and adoption. With store closures, isolation and social distancing restrictions in place across the region, millions of consumers have been driven online, maybe even for the first time, and this has meant that e-commerce has become the default buying option for many customers, which has subsequently driven growth for the category. Industry reports suggest that while consumers eagerly adopted digital spending when restrictions first came into play, these consumers are here to stay with these new audiences continuing to buy online.
At Quantcast, using our audience insight tool, we analysed thousands of purchases across key retail categories in APAC to better understand 2019 holiday shopping trends, as well as shifts in shopper behaviour and audience profiles across the pandemic period. Our research found that…
- Millennials are driving category growth: with disposable income often being spent on travel and entertainment (but not this year!), millennials are reallocating their hard earned cash to the retail category.
- And Gen Z aren’t far behind: Gen Z’s spending power is on the up and whilst this group may not be the biggest gift-buying audience, during the pandemic we have seen huge growth in spending from this audience, especially across the luxury goods category.
- A mobile motivated audience: with increased internet usage across mobile devices worldwide as a direct result of the Covid-19 outbreak, consumers are tied to their mobile devices more than ever. Mobile is the predominant device used to buy holiday gifts and has become even more prominent in consumer buying throughout the pandemic, even for larger priced (and sized) items like furniture.
- Parents need some pampering: having the kids at home, thanks to lockdown restrictions, seems to have spurred parents (especially the mums) to treat themselves to a little something. Quantcast’s audience insight report shows that parents increased their spend within the fashion and luxury goods categories when compared to the 2019 non holiday buying average.
IR: Which retail categories do you think will benefit the most from gift-giving this year, and why?
RT: Family tops the list as spend priorities shift across APAC with consumers planning to re-allocate spend towards immediate family – a universal shift reported in a recent report from WARC. Whilst spend is set to increase this festive period, the focus will be around gifting for the immediate family. With this in mind when predicting category growth, I predict that those that will succeed and see growth this holiday season will be retailers that cater to family gift-giving, entertaining and festive feasting. That could range from sporting gifts for the grandkids, gardening gear for dad, tech for mum or a seafood platter for family feasting.
Categories and retailers that have a strong online storefront will be well-positioned for holiday buying, with ongoing health and safety consumer concerns around in-store shopping, and potential reluctance to hit the stores at the peak shopping season.
IR: Are you seeing any interesting generational differences in what consumers are planning to buy, or how they’re planning to shop?
RT: One of the key consumer shifts that I’ve seen emerge from the pandemic has been the adoption of technology in older audiences. I think of my own personal experience, my grandparents have purchased a tablet, I can now chat with them over video call even though I’m thousands of miles away and whilst my granddad still loves to read his weekly newspaper he is also checking the news online. Covid-19 has brought new audiences online providing new opportunities for both customers and businesses.
When I think about generational differences in consumer buying behaviour, the holiday retail insights study that we conducted at Quantcast showed there were clear consumer holiday buying shifts prevalent across the sectors of fashion, luxury, sporting goods and homeware and furnishings, when compared to the non-holiday 2019 consumer buying baseline. Key findings included:
- Fashion audience shifts:
- Baby boomers: notable spend reduction in holiday spend when compared to their buying average across the year.
- Parents: Increased their spend in fashion buying around the holidays, perhaps suggesting that parents are moving away from the regular toy buying and investing in clothing for their children too.
- Luxury audience shifts:
- Millennial mums: Christmas gift for you, Christmas gift for me. With huge increases in luxury goods buying during the holiday season it looks like mums need a little treat too.
- Sporting audience shifts:
- Grandparents: Grandparents see the value of the great outdoors and are buying active gifts for the family which has driven increased buying for the holidays. With an increased number of older customers online, this growth trend is sure to continue.
- Homeware and furnishings:
- Females: The largest composition growth among homeware buyers in the holiday season is females.
- Without kids: Consumers craving some social interaction during the holidays are setting up their space to entertain.
IR: A lot of businesses have experienced significant e-commerce growth this year. What do they need to do to keep online shoppers coming back, especially during peak season?
RT: The e-commerce category has seen significant growth, partially because consumers had limited other options, but also because businesses adapted to the new environment quickly. Retailers now more than ever need to have a clear digital strategy that aligns with the online purchaser mindset and how consumers buy online. Businesses need to provide a positive shopper experience – whether that’s user experience when browsing, tailored device strategies, transparency in communications or flexible payment options.
Whilst consumers’ move to buying online has increased, it’s important for businesses to connect online and offline data to get a holistic view of buyers behaviour and use this to build their digital strategy to engage with customers and prospects in a meaningful way. This will become even more important as bricks and mortar retailers open more widely and restrictions are downgraded.
And finally, it’s not just about keeping shoppers coming back, businesses should also focus on building their in market audience pool to continually find high value, highly relevant new audiences that can help to grow their brand.
IR: Do you have any tips to help brands cut through the noise and reach shoppers at this time of year?
RT: Here are a few key tips for retailers this holiday season…
Have a clear digital strategy
New audiences have moved online and e-commerce has become the default shopping option for many. Make sure you have a clear digital strategy that aligns with the online purchaser mindset and their buying preferences. Leverage partners that can help you better understand these new audiences and enable you to engage with customers and prospects in a meaningful way.
Invest in audience insights and tailor your creative and messaging
The importance of understanding your audience and their evolving buying behaviour is greater than ever. Consumers want brands to be authentic, transparent and they want creative and messaging tailored to their desires, wants and needs. Invest in partners and technology that enable you to draw live audience insights so that you can adapt your creative, messaging and promotions to the various gift-buying audiences for your products and services.
Start promoting early
I’m not usually a proactive holiday shopper and often leave buying until the last minute, however, now that I have a young child and am starting to think about gifts for him, I’ve noticed that getting gifts delivered in time for Christmas is tricky. So my first suggestion is to start your holiday marketing early. Whilst holiday buying traditionally starts to pick up around Black Friday, it’s important that brands start promoting early to capture consumers that are looking to buy online to avoid the crowds and shipping delays, to seek better deals and to feel the holiday cheer sooner. Launch your holiday marketing ASAP to join the consideration set and ease demand as the holiday season approaches.
Engage through digital advertising
With the rise of e-commerce and consumer buying increasingly moving online, digital advertising can help to engage with the right people at the right time when they are more likely to convert. Leverage the power of the channel and technology to draw live audience insights that can help inform and shape your marketing strategy, build your in market audience pool to find highly relevant audiences and target these audiences with relevant messaging to maximise sales growth this holiday season.
Click through to read Quantcast’s 2019 holiday retail audience trends and better understand 2020 holiday buying predictions and download the full Retail Insights Report.