Christmas Spending In 2020: Five Key Takeaways

2020 has been a year like no other for retail. With the pandemic ongoing and the uncertainty surrounding what a post-lockdown December looks like, consumers are in a bit of a holding pattern, and as small business owners, we have to expect the unexpected. We will see a Black Friday boom or will there be more in-person purchasing once lockdown is lifted?

With everything so up in the air I want to spend episode 18 of The Resilient Retail Game Plan looking at what current research indicates about the festive selling period and how you can use my five key takeaways to be as prepared as possible when it comes to securing your customers Christmas spending this year.

We’ll look at the increase in online traffic for both purchases and gift research and the importance of putting your best foot forward when it comes to building your business’s digital presence; we’ll look at trends in spending across demographics and how, positively, the piece of the purchasing pie being given to small businesses is actually growing; and we’ll also cover the key purchase drivers of protecting, connecting and distracting and how you can leverage those themes to best market and share your products with your customers.

No time to listen? Read the episode in this blog post below!

These are my five key takeaways about what’s happening for Christmas spending in 2020, and how they relate to your business.

1 – More online shopping

I’ve talked about this lots in previous blogs. Online shopping is at the highest levels it’s ever been prior to lockdown, it was about 25% in the UK and jumped up to around 33%. It went down once shops reopened in the summer, but is now pushing ahead again because of Christmas spending.

Now, it’s not to say that people aren’t going to be shopping in shops. In fact, in the UK, there’s lots and lots of evidence that people have been more supportive of their local shops all the way through the pandemic. And that’s expected to continue once the shops are able to reopen again on 2nd December.

Research is showing that customers are going to be pre-prepared – a third of people surveyed in the Capgemini survey said that they would only visit a physical shop once they had decided what they wanted to buy.

So for this year your online digital presence is more important than ever and I can’t stress this enough. People will either be shopping online or for the ones that want to shop in person, they will want to go online to do their research first. They want to understand what’s available, make their choices, and then go ahead and make the visit to a shop. (You may find my blog post ‘Growing Online Sales’ useful too).

Over the last few years, December was the biggest spending month but with the advent of Black Friday and other discounting, Christmas spending has been creeping forward into November. And the last few years November has been the biggest Christmas sales month.

However, this year with the impact of lockdown there’s a lot of people waiting – people are just not really sure if they need to be buying distance gifts for people, they won’t be able to see, or if in fact, they will be able to see loved ones, in which case they might want to wait and purchase once the shops reopen. So it’ll be interesting to see how much of a big bang there is on Black Friday.

2. Overall spending will be down

Overall spending is down or slightly down for the overall Christmas period. That means according to the Capgemini research one third, or 35%, are planning on spending less and 14% of people are expecting to spend more during the Christmas period. Interestingly, within that, if you look at it broken down by age group, it’s actually younger generations who have maybe saved money or saying that they’ve saved money from the beginning of the pandemic, in order to spend at Christmas.

So even though overall, people are looking to spend less, there is a difference in the age group. So maybe think about younger age groups in general. 18 to 34 age group, for example, they are the most likely to be spending more this Christmas. Tailor some messaging to those groups that research says are going to be spending the same or more.

3. More will be spent with small businesses

The overall size of the spending pie may be shrinking slightly but the piece of the pie being given to small businesses is growing. Google Trends, for example, is showing searches for ‘shopping small’ are up to hundred percent this year compared to last.

So even though overall spending is less, it’s expected that more will be spent with small businesses. Again, if you look at it by age, it’s really interesting – 18 to 34 year olds – 50% of them are actively planning on shopping more with small businesses this year, which will mean around a 10% increase in the overall spend with small businesses. Even though Christmas numbers might be disappointing for the retail industry as a whole, for small businesses there’s definitely evidence that one in five people are planning on ‘shopping small’.

And the number of people looking to spend with small businesses is growing year on year. Another positive indicator for small, independent businesses are the third-party marketplaces, Shopify have had enormous growth – Etsy is up 128% in the third quarter – they’ve had a phenomenal time. All these signs look good for small business Christmas sales figures.

4. Key drivers for sales this year

Compared to last year, what do we expect to see people buying? Etsy’s trend guide is a really fascinating read, I definitely recommend it. Christmas decorations are up 141% on the year searches for Christmas decorations – which makes sense as there’s a really big theme around the home.

People are looking to create bright festive homes, because frankly, that’s the only place anyone gets to spend any time at the moment. The garden is also still playing a crucial role in purchasing – even in the winter time. Etsy saw a 186% increase in searches for outdoor blankets and 197% increase in searches fire pits. Think about how your messaging can incorporate garden and home.

During the first lockdown, I talked about three main drivers of people’s purchasing – protect, connect and distract. Protecting yourself and your loved ones by purchasing things to do with health and well being, ‘care packages’ for example. Connect – making connections with other people either through technology or through gifting, and then distract – keeping people busy – these are all big themes for Christmas spending.

Esty have seen a 50% increase in searches for family games, and huge increases on searches for things like DIY Christmas wreaths and embroidery kits. People want home based activities, they want things they can do with loved ones over zoom or with the family that they’re with. They want crafts, they want things to keep themselves busy, things to keep themselves off screens or their kids off screens, or just things to do to alleviate the tedium, dare I say, of being at home.

Most people are going to be having very quiet Christmases. Even if restrictions are lifted for the festive period, a lot of people are not going to want to travel, they’re going to want to stay close to home. People want to buy things that will make themselves and their loved ones feel good, feel entertained and feel like their home is their sanctuary – so make sure you tap into those thoughts.

5. Expect the unexpected

The final point about Christmas 2020 is to expect the unexpected. Normally, when Christmas is a planned out by businesses, especially big retailers, they have got years of data to look back on. Plans are put together really carefully taking into account details as small as the day of the week that Christmas falls on – then estimates about the patterns that timing will mean for the business. So when will the peak come? Where will people be buying? And when will they see that final last minute rush?

This year, selling has been really disrupted, there has been somewhat of a lull in November. We are in this weird holding pattern where people don’t really know what’s happening. Will we see a very quiet December because people have already spent their money? My feeling is no – I think we will see a bit of a boom when England comes out of lockdown as people finalise their Christmas plans, work out whether they need to send gifts to loved ones or deliver presents face to face.

I think we may see a big boom, maybe around the middle of the month when people realise that if they want their gifts to get there on time, they’re going to have to send them sooner rather than later. Remember – you are not alone – most retailers are just like you they don’t really know what’s going to happen either.

We’re all waiting to see what the customer does once we get closer to the big day. We may well see a big surge in things like gift cards or electronic gifts that people can send right at the last minute. Be prepared – the more you can do in advance mean the more adaptable you can be to changing shopping trends over the next 4 weeks. Good Luck!

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