The 2020 retail holiday season will be one unlike any others, with new challenges and major shifts for most retailers. Consumers have adjusted values and priorities, in addition to how they’re spending their time and resources, which will force retailers to reevaluate every strategy they’ve ever implemented leading up to the holidays.

This is the first podcast of a multi-part holiday retail series designed to discuss and analyze upcoming challenges and opportunities this holiday season with the goal to help brands and retailers make the shift from reactionary to intentional.  In this podcast, Joe Cox, Activation Strategist at Callahan, and Kristin Demel, Retail Strategy Director, discuss:

• A look back at the 2019 holiday season
• Consumer mindsets and priorities this holiday season
• Current challenges for retailers
• Start the discussion on reactionary vs. intentional retail strategies

Listen here:

Other podcasts in our Retail Wrap-up 2020 series include:

• Retail Wrap-Up 2020: Stop saying omni-channel
• Retail Wrap-Up 2020: Shopper modes are the new purchase channels
• Retail Wrap-Up 2020: Will Black Friday ethics lead to retail innovation?
• Retail Wrap-Up 2020: The current state of customer loyalty
• Retail Wrap-Up 2020: Setting goals for 2021

---

Welcome to Callahan’s Uncovering Aha! podcast. We talk about a range of topics for marketing decision-makers, with a special focus on how to uncover insights in data to drive brand strategy and inspire creativity. Featuring Joe Cox and Kristin Demel.

Joe:
Hi, I’m Joe Cox, the Director of Communication Strategy for Callahan, and you are listening to Uncovering Aha!, a Callahan podcast. And I’ll tell you, last month we were having our quarterly brainstorm for topics that are going to be coming out for the last quarter of the year and things to do podcasts around, write blogs, all that fun stuff, and the topic came up for our annual holiday retail episode, which we do each year. And I will say that after talking with the team for a total of about five minutes, we soon realized that there’s a much bigger story going on with retail, of course, in 2020, and it’s going to probably take more than 15 to 20 minutes to get through all the different parts of not only the consumer, but of the retailers and everything that’s going on operationally and behaviorally that goes into an extremely interesting holiday season.

Joe:
And right now, we have right before Amazon comes out with this kind of changed, pushed back Prime Day, we thought who better to help lead us through this time of uncertainty and help us have this discussion about this year’s holiday season, than our retail strategy director, Kristin Demel. And we have Kristin right here. How are you doing?

Kristin:
Hey, Joe, I’m doing really great, and I’m super excited to be given more than 15 minutes to talk about what’s going on in retail this holiday season. I was thinking about what we might talk about and looking back to what we talked about last year, and it’s so interesting, because we thought we had these really large headlines about things changing with consumers, things changing with retailers. And I’ll just give you, since you didn’t have the pleasure of being on it with me last year, I’ll just give you the headlines. So the things we talked about last year was around how the role of Black Friday in the holiday season is changing and Black Friday had basically become like this just trigger to tell everyone, hey, it’s time to start shopping. It’s time to get out your decorations. It’s time to start thinking about the winter season in general, but we were all celebrating it by shopping for ourselves versus getting holiday gifts. And that seemed like something big to talk about.

Kristin:
We were also talking about how consumers are making a trade-off between convenience and savings, as they were thinking about where to purchase from. And then we were also talking about how consumers were wanting to have more control over the gifts that they were receiving, and so a significant portion of consumer spending was shifting into gift cards, and consumers, prior to receiving any gifts, were already planning to return the gifts that they were going to get, and pick out their own stuff. So as we think about all of those things, while true, and while they felt changing and impactful to how we were thinking about holiday 2019, there could not be any bigger differences this year, as we started to think about all the things that are changing, as retailers and brands are thinking about Q4 2020.

Joe:
Yeah. I think that it’s so great to look back on 2019, where we felt that the big changes were people buying stuff for themselves, and this push into gift card percentages. And, well, I think it’s a perfect example of saying, okay, well, now in 2020, only a year later, and really a bit less than a year later, since we’re talking about this in October, and poof, it’s hard to even keep up with the amount of changes. Of course we know we’re still inside of a pandemic and all kinds of things going on. Help me remember, and let’s talk about what is changing this year, and probably maybe starting with the consumer.

Kristin:
Yeah. I love the thought about starting with the consumer. Anything that happens at retail, as a retailer, we always start with the customer first in mind. So let’s think about, like, there’s two, in my mind, big headlines, as you read through all the content that’s online, and as you kind of live through this yourself as a consumer. I think the first one is, I’m just going to wrap it up with a consumers’ lives are totally different than they were last year at this time. Probably the understatement of the entire podcast, but they’re totally different, right? We’re living this socially distanced life. We’re not going anywhere. And if we are, we have at least one mask on, if not some sort of protective eye gear, if we’re trying to get on a plane. And so in general, we’re not traveling as much as we would have last year.

Kristin:
I think there’s also folks living through unemployment and job uncertainty as it relates to, okay, what are my finances going to look like? What is my work-life balance going to look like? Things are changing. And that’s all kind of leading to, for consumers, this kind of shift in values and priorities. There’s less time out of the house, more time in the home, potentially thinking about how they spend time and spend their resources on their family and friends differently than they would have in years past.

Kristin:
And I think there’s also the other big headline of there’s just increased uncertainty. There’s not a lot that’s going to be certain about 2021, or certain in our lives. There’s a lot of speculation about our finances. There’s ongoing speculation about government support related to finances. It’s also an election year, which brings a lot of uncertainty about what’s going to happen past November 2020. And then, even as you think about consumers planning for the holiday, I’m not sure what my plans are for Halloween that’s in a few weeks, let alone what my plans are going to be for Thanksgiving or for the December holidays. There’s just so much up in the air. Can I travel? Can I see my families? Am I going to be doing a Skype holiday or opening presents over Zoom? Just a ton of uncertainty around what that’s going to look like.

Joe:
Yeah. As consumers, and kind of looking at ourselves, it’s different than having … We’re always used to a bit of change happening, right? No matter how well we plan, there’s going to be something that shifts that plan. But in 2020, we are continuing, even from March, in this space where … And it’s been like this throughout, where we are not sure what we’re unsure of, where we are the unknown unknowns, as a consumer. And it is an extremely interesting time to look at that customer behavior, and what a perfect, like putting it into a box, than to look at the peak season and holiday season this year. But it’s not like it’s just consumers. It’s not just our behavior and what’s going on in that outside world. Of course, that has affected heavily the retail landscape. And why don’t you help us understand a little bit of what retailers are going through, even operationally right now?

Kristin:
Yeah. So that’s a great, great segue into, there’s a lot of change and uncertainty happening as consumers, which then makes how retailers react to that and prepare for demand changes up in the air. So I think what everyone can agree on as you look at what’s happened this spring is that the channel in which consumers are purchasing from is very different than last year. My favorite statistic from PayPal was that their largest growing account population was with the baby boomers. And so as you think about what that just indicates, it’s folks that never were shopping online or shopping online very infrequently are now using that as a primary purchase channel and have shifted a significant amount of their spending online. And I think that just speaks to the magnitude. It’s not just the gen Z and the millennials that are shifting their purchases. It’s really all consumers are shifting their purchases, which creates all sorts of impacts and challenges for the retailers.

Kristin:
They try to meet the demand, and it has created a lot of just, I’m going to call it chaos, in supply chains. There’s this feast or famine inventory right now, where there’s either nothing of a product out there, or like in the case of seasonal apparel, there’s a ton of inventory sitting out there. There’s also the chaos that’s created by home delivery and pickup in store, and trying to be able to allocate resources, find the amount of bandwidth just to get the product where the consumer needs it, has put a lot of change in retail and put a lot of pressure. And as you think about holiday, this is going to be a big factor still in retailers’ minds as they think about how to adjust. Everything that’s going on in consumers’ lives leaves retailers thinking about, well, what will consumers even be buying, and when are they going to be buying?

Kristin:
And then I think the last piece of this is, you know, it’s interesting that we’re having our holiday podcast kind of kickoff right now in October, thinking about Prime Day, which is a month earlier than when we had this podcast last year. Last year, I looked, and we released our Black Friday podcast the week of Black Friday. But now here we are, even just an agency, as we think about giving advice to our listeners about holiday, releasing almost six weeks earlier than we would have last year, which creates all sorts of different profiles that you know are happening out amongst consumers in their purchasing cycles.

Joe:
You were just talking about the amount, and it keeps coming in by the hour, of retailers coming on this week, kind of following Amazon’s lead, and Amazon didn’t push anything up as much as … It’s usually in July, but supply chains, and just think about operationally wise, warehouses couldn’t have as many people in them. There was a lot of added operational struggles, as well as consumer changes, that made it so we weren’t getting our two day, poor us, our two day deliveries. We actually saw that happen. So was that it, they were moving it from July to October, to kind of not only, it’s like a double strategic move, not only push it back to get a little bit time to get their operations in order, but also now maybe be the ones to kick off this new peak season?

Kristin:
Yeah. I think you hit on, supply chain was crazy in July, as retailers are trying to think, and Amazon’s trying to prepare for what items do I want to have on sale at a discount? At that time, we still couldn’t get, to your point, the fast, flexible shipping that was happening. But also, consumers’ mindset was still in the kind of survival mode as far as goods and services, or goods that they were buying and services that they were not buying. We were thinking about household items, and everyone needed toilet paper in July. So thinking about what am I going to buy on Prime Day was just not top of our list for consumers at that time. So Amazon released their notice that it would be delayed, and we’ve all in the retail world been watching and waiting for, okay, when is it going to hit?

Kristin:
And I think now, with it coming in October, we’re at a place as consumers where we’re, while we’re still living in uncertainty, there’s a little bit more understanding of what that uncertainty might be, guardrails, maybe, if you will. And so we’re starting to transition to saying, okay, I need to figure out what life is going to be like, and we’re starting to purchase again. People are leaving their houses. And so it’s a perfect time. But in the next breath, and it starts to say, okay, well, with the timing of this, what’s the impact to the total fourth quarter, and how is that going to adjust spending? And what do I do if I’m not Amazon? How do I compete with that or play along with that? And to your point, that’s where we start to see this growing list of retailers releasing their mid-October sales.

Joe:
So maybe a good place to start, and maybe finish this first piece of the series and this introduction to this 2020 holiday in retail season would be, like set us a scene, because of all your background, you’ve seen it so many times, what normally happens when retailers build that plan of attack for holiday? And I’m sure you can relive it, because it’s a very specific and important time, like you said, for that fourth quarter. What are retailers, what would they usually be doing in a time that wasn’t 2020?

Kristin:
So in a normal, well, I hate to use the word normal, but let’s be in a year that’s not 2020. As I would have been in a retail office, building plans, the first thing that every retailer that I’ve worked for or with, always starts from last year. What happened last year? How can I beat last year? What worked, what didn’t work, some sort of hindsighting process, but that’s usually the place where it starts. What did I do? What worked? And then you start to combine that with thoughts around, okay, what’s working today? What are consumers reacting to, in either the product that I’m offering, the way that I’m communicating with them, or the types of sales that I’m putting up? What’s working that maybe would tweak what I offered last year from a promotional perspective?

Kristin:
And then, hey, what do I have that’s new or exciting that maybe somebody else doesn’t have, or what do I have a lot of, and so let me just put a really hot sale price on it and help get the inventory to move out the door? And then last, I think every conversation I’ve ever sat in to plan holiday is around how am I going to drive as much traffic and urgency as possible to my store?

Kristin:
And these four thoughts really help you set up what your holiday strategy is going to look like. But if you start to think about, okay, now how does this work for 2020, a lot of these things don’t necessarily lead to a very strategic approach to 2020. So if you start to think about, well, what worked last year, well, we just kind of said that the consumers’ lives are totally different and they’re really uncertain about their future. So is last year still the place that we should start? All right, well, we just came off the oddest spring 2020. So when I think about product and price and promotion, is that still the best place to look to, to inform where I’m going to go?

Kristin:
And then last, as you start to think about the last question around how am I going to drive as much traffic and urgency to my store, well, that brings up a whole nother load of questions around safety and comfort of consumers being in a store. And I’m speaking this way around a brick and mortar store. And so then you have what we just talked about around Amazon releasing Prime Day. And it’s created this environment in retail where everyone’s kind of whacking a mole, and they’re just kind of thinking like, “Okay, this has happened, so this is my response.” And there’s a lot of this reactionary behavior. And as you watch your email trail that comes out from your retailers that you subscribe to, as you watch the news, et cetera, read headlines around what retailers are doing, it’s just feeling very reactionary this holiday season, where retailers are putting out their response to some stimulus that’s happened in the environment.

Joe:
Yeah. So through this series, and this is what we’re going to do, it’s going to be a commentary throughout, because we’re all learning. We’re going to be taking as quickly as we can the insights as they come in, to really try to give our clients and listeners an ability to really, what can we learn from everything that’s going on this holiday season, and start applying that to a 2021 that is not going to be, it doesn’t on January or the end of December and on New Year’s Day, it’s not going to be a different, necessarily different environment. So I really like what you’re saying there. If we’re really trying to push from reaction, what are we trying to get to?

Kristin:
Yeah, I think, you know, we’ve been living with this since March, and now it continues to evolve and we continue to learn. But as we think about holiday, I think it’s a great time for us to kind of take a breath as a retailer and brand marketplace and say, okay, wait, I’ve been reacting all of spring from the pandemic news, to the shortages, to the supply chain, to the ramping up of my capabilities just to meet consumers online where they’re expecting, to now reacting to Amazon Prime Day. It’s time, I think, to strategically take a breath and say, okay, to your point, this isn’t going away January 1st, 2021. So how do I step back and shift out of this reactionary behavior and start to be intentional in how I’m thinking about my learnings from holiday 2020 and how I apply that to 2021 planning?

Joe:
Yeah. And that really starts, that starts now, and trying to apply as quickly as possible all the insight and data that you can to move from that uncertainty, which we have no idea, to kind of start to mitigating risk and understanding where we’re at, and it’s not easy, especially when you’re trying to run a business that’s operationally transformed, too, I can guess. And you know, how people are working, and the safety of not only your staff, but the safety of people coming in. Very interesting.

Joe:
And we are, I’m excited to be able to come with you on this journey through this series, to really learn what happens. We don’t know exactly what will happen after Prime Day. There’s a lot of third-party sellers that don’t have enough inventory in, and it’s going to be really an interesting kind of razor’s edge on timing, it feels. So I love the idea of, hey, we’re going to help you get moving from reaction to planned, and we’re going to be with you. I think we have planned to be going through the entire holiday season. Is that right?

Kristin:
That’s right. And as we were thinking about how we could fill 15 minutes, it’s now turned into a series. I think it’s, to your point, moving away from this reactionary behavior, but also, let’s just spend some time and talk about some of the hard stuff. I think it’s become easier to be reactionary, not easy but easier, because there’s some really big questions out there and brands and retailers are going to have to chew through some important topics. So Joe, you and I can spend some time talking through those and helping folks think about them and ask themselves the right questions.

Joe:
Yeah. I’m really looking forward to that. And I will take off by saying this, is that I really think that the good thing to come out of it is in these times of chaos, I have a BF Skinner quote, but it’s, “Chaos breeds genius,” because it offers something to be genius about, right? It offers something innovative, truly innovative, not innovative in a way of, hey, we’re going to innovate on these small little tweaks, but we’re going to be on the lookout for those retailers and those marketers out there really doing deep innovation and trying stuff out, and having that conversation as it goes.

Kristin:
That’s great. Well, I’m looking forward to next time. Thanks, Joe.

Joe:
Yeah. Thank you. And see everybody here next time, when we will continue the conversation on the 2020 holiday season. And until then, everyone take care, and we’ll see you next time.

You’ve been listening to the Uncovering Aha! podcast. Callahan provides data savvy strategy and inspired creativity for national consumer brands. Visit us at callahan.agency to learn more.