holiday season 2020

Holiday Season 2020: Understanding Consumer Behavior to Inform Business Strategies

With Black Friday and Cyber Monday just around the corner, the holiday shopping season is officially in full swing. The events of 2020, however, will have shoppers and businesses alike navigating uncharted territory as the pandemic continues to impact consumer behavior.

To help startups and small businesses understand these changes and how to pivot accordingly, our team at Constant Contact asked 3,000 U.S. consumers about their 2020 shopping habits, including how they’ve been engaging with small businesses since the start of the pandemic and how they plan to do so this holiday season.

The data revealed three key areas small business owners should focus on to meet their customers where they plan to spend this year in order to have a successful holiday season. We’ll discuss those three areas in depth, below.

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Establishing an online store

Online retail sales this year have already hit historic levels and will likely continue to trend upward as the pandemic turns more new and casual online buyers into regular online shoppers.  As a result, this holiday shopping season is likely to eclipse any previous sales records, meaning there is even more pressure (and opportunity!) for startups and small businesses to establish an online presence.

As expected, brick-and-mortar retail is still not back at the level it once was, and the road to recovery will be a long and complicated one as new habits turn to preferences and reshape the entire retail landscape.

At the start of the pandemic, small businesses that had online selling capabilities reaped the benefits of being able to continue operations despite shelter-in-place guidelines that became commonplace across the country. According to our findings, this holiday season will see a continuation of this trend, as only 10 percent of surveyed consumers said they would only holiday shop at a small business if it had a physical store.

The online marketplace has become the new normal and small businesses hoping for a strong rebound must give shoppers a way to buy online.

E-commerce presents a massive opportunity for small businesses that need to remain connected to their existing patrons and attract a wider audience to make up for any lost revenue from earlier in the year. Small businesses that were early adopters of e-commerce will be in the best position this holiday season to capture the most sales. However, simply moving products online will not guarantee success. Businesses need to make sure they are providing a simple and convenient buying process online that consumers can easily navigate. As shoppers spend more time shopping online, there are certain expectations for the experience that need to be met in order to ensure repeat purchases and happy customers.

Related: Big News: Consumers are Still Shopping Small During the Pandemic

Finding community support

This year has highlighted how important small businesses are to the fabric of their communities. Certainly, they are essential to the local economy, but they also embody the entrepreneurial spirit that fuels the American dream in cities and towns across the country. They serve as points of pride in local communities and help make each one unique. Though chain stores and box retailers can be found on every major highway, it’s refreshing to see that our findings show the desire to shop in local communities hasn’t faded during the pandemic.

In fact, 60 percent of those surveyed said they have made more of an effort to shop at local businesses this year compared to 2019, and another 20 percent plan to do so before the end of this year.

There’s reason to be optimistic about a positive end to 2020 as well, as 62 percent of shoppers said they plan to support small businesses they’ve never visited before the end of the year. It’s clear that these emotional connections to local communities influence purchase behavior and spur consumers to help small businesses power on, especially during tough times.

As consumers become the biggest advocates for small businesses, owners should use their local roots to their advantage to communicate directly to the people who matter most and who want to support them. According to our findings, consumers prefer to support small (only five percent said they would always choose the bigger retailer), so make sure your customers know what you have to offer. From email marketing and mailers to local signage, putting a face to the business humanizes it and can make shoppers more inclined to shop locally instead of buying from large retailers.

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Communicating value

It’s critical for small businesses to understand their audience and what they value so they can communicate the right message and potentially influence purchasing behavior. When deciding between a small or large retailer, price and speed of delivery are two of the main drivers, however it differs greatly between generations because of what they value most. For consumers over the age of 55, we discovered that price was the most significant factor behind their purchases. Conversely, those in the 18 to 24 age range ranked fast shipping and fulfillment higher as more important than price – this, of course, once again highlights the importance of setting up an online store.

Once you know what your customers are looking for, find creative ways to deliver that value in ways larger retailers cannot. While small businesses might not always be able to compete on the same level as larger retailers for price and speed, there is an opportunity to communicate value in ways that larger retailers cannot, and, in turn, stand out from the pack.

Small businesses have more flexibility to try unique ideas and experiment creatively without needing to go through multiple sets of reviews and corporate brand guidelines. That could mean bundling similar products to create a more enticing offer, better customer support, or even partnering with other businesses in your area to drive mutual success. Additionally, the personal connection that consumers feel to the businesses in their community often means they’re more receptive to communications from these stores.

This holiday shopping season is expected to break records, and startups and small businesses need to understand how the shopping behavior of their target demographic has changed throughout the pandemic. Those who take steps to truly understand what the most important buying factors are for their customers and build an intuitive online store to allow them to make purchases will put themselves in the best position to end 2020 on a positive note.

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