After a difficult year, the holiday season will be a critical period for brands and retailers looking to recoup lost revenue. In order to see success, the 2020 Holiday Retail Report from Klarna says that companies should be focusing on tailoring the in-store and online experiences to consumers’ specific preferences.
“The holiday 2020 season will look very different this year, and brands that start planning for it now will be best prepared to meet their customer needs and make up for losses from the pandemic,” said David Sykes, head of U.S. at Klarna. “Data from our survey reveals that 68% of consumers plan to start shopping by Cyber Monday.”
A majority of consumers were found to desire a seamless transition between e-commerce and brick-and-mortar channels, with 59% expecting to see the same items available at both destinations. Many customers will now begin their shopping at one location and complete their purchase at another, emphasizing the importance of a consistent omnichannel strategy. And safety and security remain factors as well, with 47% saying “buy online, pickup in store” makes them feel more comfortable.
To resonate with specific shoppers or demographics, Klarna recommends that retailers highlight specific items or categories, depending on the channel. Shoppers with an income of $100,000 or more are likely to purchase their holiday gifts online (55%), suggesting that online platforms could benefit from merchandizing higher-end products. Klarna also advised pairing these with a ‘buy now, pay later’ solution to decrease price sensitivity for larger purchases. The company reports a 40% increase in average order value when installments services are integrated into the checkout process.
For brands and retailers targeting a younger consumer, the report found that Gen Z is more likely to pay a premium for limited-edition items and drops than other demographics (42% compared to an average of 27%). Younger consumers are also more likely to favor vintage and resale (32%) than other groups, so Klarna suggests that companies emphasize “nostalgia and exclusivity in their assortment” if targeting this consumer.
Despite current changes to retail, customer experience is still a significant piece of the conversion process. Klarna’s survey found that half of respondents believe shopping is more fun than dating, and a majority prefer to shop in-store during the holidays. Additional service features favored by respondents included deals and discounts (58%) and free shipping (54%).
But while the holiday season is likely to be a source of increased sales for brands, the report did show that consumers are particularly focused on the financial implications. Three-quarters of respondents said price is still a very important factor when deciding on purchases, and 32% stated an intention to spend less this season than in previous years. However, 39% of millennials and Gen Z respondents said they would spend more if they could pay through interest-free installments.
Trust was also found to be an important part of the brand-consumer relationship this year. The pandemic has shifted shoppers’ comfort levels, with 66% preferring to buy a product over an experience this year. Brands that can foster a trustworthy identity will be likely to see rewards, particularly if they are seen to give back, because 81% of consumers believe this is important for brands to do.
When it comes to discovering brands, consumers are still more inclined to listen to a personal recommendation from family and friends (79%) than to a social media influencer (21%). Klarna recommends that retailers take advantage of referral programs, shareable offers and social shopping in order to capitalize on this.
“With seasons shifting and more people shopping online over in-store than ever before, now is the perfect time for brands to get ahead and understand how, where and on which categories consumers plan to spend around the holidays this year,” said Sykes.