How Brands Can Rise, Retain, and Return Stronger Than Ever this Holiday Season

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While the coronavirus pandemic has created even more uncertainty for the already volatile retail industry, the lucrative holiday shopping season remains the biggest question yet. With some states recovering faster than others and consumer behaviors constantly shifting, retailers need to understand how people are planning to shop as we enter the final months of the year. This information will be imperative for having a successful holiday season with sustained loyalty throughout the New Year.

Prior to Covid-19, traditional demographics still directed many brands’ targeting strategies. However, the pandemic has laid bare just how flawed this method can be. We believe that the best measure of what someone will purchase in the future is looking at what they’ve purchased in the past. This holds true even in an uncertain market and is invaluable for retailers as the holidays approach. 

While all retail categories have been impacted differently, leveraging purchase history can help brands understand the trajectory of consumer spend. Is it beginning to rise or return to pre-Covid levels? Or has spend been essential in a category throughout the pandemic, forcing those in the category to ensure they can retain the recent influx of shoppers?

RISE: Foster Growing Consumer Confidence

Certain businesses were built to thrive in an online world, while others have been more severely impacted by state-mandated closures and other restrictions that limited in-store shopping. As states reopen and spend rises, retailers need to focus their marketing efforts accordingly. Cardlytics’ Leading Recovery Indicator, which tracks discretionary spend on small-ticket items to indicate a return to normal consumer behavior, was at its highest point since the beginning of the pandemic the week of September 3, down only 11.9% year-over-year (YOY). For comparison, discretionary spend hit a floor the week of March 26, when it was down roughly 75% YOY.

Another promising sign for brick-and-mortar is in-store spend. In most retail categories, it is trending positive after experiencing minor setbacks throughout the summer. Even apparel, where in-store spend has been significantly lower recently, is on the upswing. As of September 9, in-store apparel spend was down just 3.6% YOY after hitting its lowest point the week of March 26 when spend was down 84.3% YOY. Other categories like auto products, home and garden, and sporting and outdoor goods are also seeing positive year-over-year in-store spend.

To keep the positive in-store momentum going, brands should make concerted efforts to foster and grow consumer confidence and drive foot traffic. Offering in-store-only sales and promoting proper facial coverings and sanitary efforts are excellent ways to remind lapsed customers that you’re open for business as well as attract new customers that may have been displaced from their favorite stores due to Covid-19.

RETAIN: Continue to Drive the Online Affinity

Brick-and-mortar spend may be just starting to recover, but online spend has been consistently inflated throughout the pandemic. Almost all retail categories are experiencing an increase in overall online spend, with some sharper than others, so now is the time to focus on retaining these new customers.

Even as stores open their physical locations, many online retail categories are still seeing positive week-over-week changes in spend, a possible indicator of what’s to come during the holidays. For instance, as of mid-September, online drug store and pharmacy spend was up 120% YOY and online grocery spend was up 93% despite more restaurants reopening. 

Looking back on another lucrative shopping season — back-to-school (B2S) — Cardlytics’ view into one in two US card swipes showed that certain categories saw spikes in spend in early August as consumers prepped for the school year. This was later than usual since Amazon Prime Day, which typically pulls B2S spend earlier in the season, was pushed to mid-October. Still, online spend significantly outpaced in-store the week of August 6. For instance, general and multiline stores, which are hot spots for stocking up on back-to-school essentials, saw a 55% YOY increase in online spend the week of August 6, but in-store spend decreased 1.4% YOY in the same time period.

The sharp increase in online spend during B2S is a sign that retailers need to bolster their omnichannel offerings immediately to meet consumer preferences and retain shoppers throughout the upcoming holiday season. Offering curbside pick-up, next-day or free delivery, and BOPIS (buy online, pick-up in-store) will help brands ensure they’re not leaving money on the table.

RETURN: Facilitating Convenience for All

While online retail spend might be growing as a result of the pandemic, omnichannel brands also need to capture in-store sales. In order to keep a heightened focus on both the online shopping aficionados and the traditional brick-and-mortar spenders, retailers must facilitate convenience for all — particularly during a pandemic.

For instance, with health and safety concerns around Covid-19, many shoppers are deterred from using cash to make their purchases. Physical stores, as well as online retailers, need to ensure that their shoppers can pay however they’re most comfortable, including contactless methods. Beyond payments, consumers have become wearier of handling and using paper coupons and clippings that might carry germs. With the financial stresses of the pandemic, brands should maintain loyalty with their customer base by helping them save money on in-store, online, and mobile purchases by offering cash-back rewards through digital channels. Continuing to focus on providing a valuable, safe, and convenient experience for all types of shoppers will better equip the brands that have retained an influx of shoppers due to the pandemic to drive long-term loyalty. 

Like all industries, retail needs to adapt to this next normal, but ahead of the holiday shopping season, the stakes are high and there’s no pandemic playbook. By looking at how consumers have spent in the past and which trends are sticking, brands can better understand how holiday spend will shake out. Using these spend trends and adjusting their strategies accordingly, retailers will successfully rise, retain, and return stronger than ever.

Angie Amberg is Cardlytics’ VP of communications.

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