2020 Deloitte holiday retail survey Reimagining traditions

21 October 2020

Over the past 35 years, America has moved from catalogs to home shopping to online and mobile. Deloitte leader Rod Sides considers how American shoppers will adapt in this holiday season overshadowed by COVID-19.

Tanya Ott: This time last year, here’s how I was feeling about the start of holiday shopping …

“And I don’t know about you … but I haven’t started my holiday shopping. I mean, I’ve got a list of people I have to buy for and I’ve got some ideas of what I’m getting some of them … but, despite my planning, I’ll probably be running out at the last minute trying to check those things off my list.”

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Tanya: How much can change in a year! If you’re like me, you’ve probably done more online shopping in the last six months than you have in a very long time. Being at home so much—and on my computer—means I’ve already checked the list twice and finished most of my holiday shopping.

I’m set, but my friend Susan Valot in Los Angeles has a dilemma.

Susan Valot: I usually get family tickets to some event or theme park or latest play. But this year, with the pandemic, that’s out. There are no plays. The theme parks aren’t open. So what I’m thinking of doing is for the teenage generation of the family to go with gift cards, because that’s easy. Then for the generation like my parents, I’m thinking of like service gifts. So, telling them I’ll make them dinner or clean their house at some point, something that will help them and is not just going to sit around the house.

Tanya: This holiday shopping season is going to be interesting, for sure. My guest today —Rod Sides—is vice-chairman of the retail practice at Deloitte Consulting LLP. Every fall, his team surveys thousands of people just like you and me to find out what our holiday shopping plans are. They’ve been doing the survey since 1985.…

Rod: I’ll tell you that the first innovation was that we started looking at TV. Home shopping became a big issue—whether it be Home Shopping Network, QVC, etc, we saw this movement to remote shopping. We went from catalogue, now to all of a sudden TV, and then we fast-forward into this whole digital experience where we started to buy things online. The big question was, would anybody buy something online? Why would you do that? How do you ever get to my house, etc.? And as you know, that’s all the norm now, the revolution we’ve seen in shopping, going from online to now mobile. As we’ve seen it through the years, it’s been fascinating how fast the changes have come. We found that Cyber Monday actually is the most important shopping day of the year now, and it really outpaces Black Friday in its importance to the retailer and the consumer. So over 35 years, we’ve seen a lot change.

Tanya: Shoppers have been through a lot. They’ve been through recessions. They’ve been through periods of growth, lots of innovation, as you allude to. And now we have COVID, which presents particular issues for this holiday shopping season. How much of a disrupter is COVID going to be this year?

Rod: We think COVID’s going to be a pretty big disrupter in two ways. Safety has become a really important factor. When we asked people why they might shop at home versus in-store, safety comes out to be a really important factor. It’s going to change the dynamic that most retailers have to deal with.

Tanya: So safety is a big issue. What other anxieties are they facing?

Rod: There’s a couple of things. First of all, folks are worried about their financial situation. We’ve seen a bit of decline, as you might expect, in people’s confidence in the economy, which drives them to spend less in particular markets. That’s a big challenge. A lot of folks don’t feel safe going back into stores until we get some kind of vaccine. About half of our respondents said they really are uncomfortable going back. What that means is we see more shift to online, home delivery, contactless type of impact, such as buy online and pick up at curbside. We’ve seen that grow dramatically.

Tanya: Fair to say then that we’ve got a holiday season that has some uncertainty for retailers, but certainly COVID is not canceling the holidays. It is causing consumers to scale back in a few areas, though. What are those?

Rod: The predominate area people are scaling back is on travel. When we did the survey, we started asking about how much people anticipated they would either do destination travel or travel home. That category this year is down about 34% year over year. Safety is a lot of that—they’re not necessarily going home to see grandma because they’re worried about potential infections, etc. That’s a huge part of what we’re finding this year in terms of where people are looking to shop and the kinds of things that they’re purchasing.

We’ve actually seen gifts and gift cards decline a little bit, about 5% year over year, while nongift purchases—specifically home and holiday decor—[is] way up. So folks seem to be nesting this year more so than in the past.

Tanya: It’s because we’re all spending a lot of time at home, right?

Rod: Absolutely.

Tanya: They’re shifting that spend away from travel to things like nesting at home and that sort of thing. What about categories that you’ve tracked over the years, alcohol and food? I would imagine that people are probably going to be spending a fair amount there because they are largely at home and cooking a lot more.

Rod: Absolutely. When we ask people what they intended to buy, food and beverage came up as the number three category. And we’ve seen that grow over the years. That is a really big growth area for many consumers. The other thing that’s interesting, when we asked people what they plan to purchase for themselves, alcohol and beverages was number one. Food was number two. So there is that tendency to nest in the responses we got back.

Tanya: The other part of nesting, of course, is that we are spending a lot more time with our fur family at home. I know my two puppies are underfoot all the time these days and they’re getting a whole lot more love, but also a whole lot more toys and other stuff.

Rod: This year we actually focused on that pet category because many of our team members had pandemic pets, COVID cats, call them what you want, but they spend an awful lot of time with new critters in the house. So we asked folks their intent to buy in that category, and it was pretty dramatic. As a gift, for instance, pet toys, décor, and accessories, 24% of respondents said that they were going to buy in that category for someone else and about 12% for their own pets—pretty dramatic in terms of the amount of folks that are going to spend in that category. And the average spend on pet and food supplies [is] $90.

Tanya: One of the types of gifts I would imagine people maybe aren’t going to be buying as much this year—oftentimes we have the office gift exchange. Because so many people are working remotely, obviously not all people, but a lot of people are working remotely, I wonder if the office gift exchange is just going to be something we kind of pass over this year.

Rod: I think we’ll pass over, perhaps have a virtual cocktail hour, something like that. Interestingly enough, we ask about the number of gifts. That’s only down by about a half of the gift, believe it or not. But the value overall also drops. That was pretty indicative of maybe missing somebody on the shopping list.

Tanya: We’ve been talking for a number of years on this podcast about the annual survey for holiday shopping. What I really love about what you did this year is you turn that data into profiles. So I’d love to tick through them just a little bit. Let’s start with Eddie, the efficient shopper. Who is Eddie?

Rod: Eddie is predominately male, about 58% of the folks in this category are male. What’s interesting about Eddie is he generally wants to go to fewer stores. He plans to stop at somewhere between one and four stores total. He’s really not focused on returns, so generally makes a quick decision, buys a product and, in general, is not looking for returns as a feature. And he’s not really interested in shopping events. For the most part, [he’s] a very focused shopper. Average spend, though, is only about $1,000. Eddie is probably the one who spends least, [and is] very focused on being able to get it done very quickly. There are a number of folks I know that probably can fit in that category this year.

Tanya: I know for a fact my husband’s in that category, not just this year, but every year. Like, if he has to go shopping, it’s got to happen fast. He wants to be in and out without a problem. So how does the retailer get Eddie’s attention this year?

Rod: The key thing is being in stock, which is always interesting, especially this time of year. With what we’re seeing in COVID, in-stock has been a big challenge for a lot of retailers because some of the shipments were delayed coming from suppliers, etc. That’s going to be really important to make sure they have plenty in stock, both online and in the stores, as we move closer to the holiday.

Tanya: The next shopper you’ve got is Chloë, the conscious shopper. She’s the one that’s going to be really scrutinizing what she’s buying and the companies that she’s buying it from.

Rod: Correct. And Chloe, generally, is a younger demographic. About 60% of this category are 44 or younger. Sustainability is super important to Chloe. About 71% of those folks in this category really are focused on sustainability and prefer to shop [from] retailers who have good sustainable practices. They prefer the smaller retailers, versus the national chain, and something in their own town. The thing about Chloe is you have to win with very clear safety measures, as well as your policies around sustainability, etc. That’s how you win Chloe over.

Tanya: When you’re talking about sustainability, what specifically is Chloe looking for?

Rod: It probably has a lot to do with how the products are made. What are the raw materials that go in? Are they sustainable? What are the packaging practices that might happen? Where were these products procured from? What are the conditions within the manufacturing facilities, etc.? Chloe wants to know a lot more about how her products got to her than just the fact that they’re there at a good price.

Tanya: Chloe is doing a lot of research then?

Rod: Absolutely. Chloe is probably our second-highest category. She averaged about $1,530 in spend. So you would imagine that she’s okay with a little bit more for the right sustainable product.

Tanya: She’s okay spending a little bit more, but she wants it to be a safe experience because presumably the safety measures that a retailer puts in place are going to translate to her into being a responsible corporate or local business owner.

Rod: Correct.

Tanya: Festive Francesca is one of your shoppers. What’s her deal?

Rod: Well, Francesca is a little bit like the traditional holiday shopper that we might think about. She spends the most, by the way. She averages $1,652 overall, but she’s all about buying gifts for others. She wants to maintain a lot of tradition and conventional shopping routines. Demographically, about 48% are over 55. Generally buys nothing for herself. So about 85% of respondents in this category are going to buy strictly for other people. She’s not going to pay extra for sustainability, though. 

Tanya: Is Francesca the kind of shopper that’s going to make a day of going out to have lunch, do some shopping, that kind of thing? She’s traditional in that sense.

Rod: She’s very traditional, [and is] the one that might go out and actually brave the crowds on Black Friday and make sure that the shopping list is complete. Very traditional.

Tanya: She’s not going to do a whole lot of online buying that’s coming to her house or she’s not going to do a whole lot of purchase online and pick up in store?

Rod: Correct. If she’s comfortable knowing that she’s going to get the items at her doorstep perhaps she goes online or perhaps she goes to the store.

Tanya: Then the final profile you’ve got is Dave, the deal seeker. Sounds like my kind of guy.

Rod: Dave, on average, spends about $1,268 and really enjoys the hunt. Searching for the right gift [at the] right price. He’ll spend plenty of time browsing, sifting through digital platforms and social media to figure out what the absolute right products are. The demographic generally skews about 36% to middle-income households. He’s constantly on the lookout for new retailers, so is very open to trying brands that he hasn’t tried before. About 98% of the Daves out there are looking for new brands. They generally spend a lot longer looking for those items, and will usually shop for more than a month to make sure he can find the exact right items. The other thing about Dave is he will hold off on some big-ticket items for the household until he sees the deals coming down the pike there for the holiday. He’s very disciplined in terms of waiting for the right deals. A lot of retailers here have to maximize their brand messaging and make sure that Dave’s clear on when the deals are coming and what’s in it for them to wait and get the right product from them.

Tanya: We mentioned a moment ago this buy online, pickup in store option. Before we started talking today, I mentioned to you that I was doing some home renovations at my house. I have bought almost everything for these renovations as buy online, pickup in store, which has been incredibly convenient. I’m gathering that that’s something that shoppers are really drawn to during these COVID times.

Rod: Absolutely, and what we have found is that buy online, pickup in store has really become table stakes. Most of us would expect our major brands to be able to offer that. The thing that we saw this year, though, was the jump in curbside pickup. Last year about 11% of respondents said they were going to use curbside. This year, it’s up to 27%. So more than double in the past year. So curbside pickup may become the new BOPUS (buy online, pick up in store). It may become table stakes for the big players that we all know.

Tanya: That was my question, because shoppers are now getting accustomed to this idea of picking up curbside. And many retailers started doing it simply as a reaction to COVID. But do you expect that this is going to be something they’re going to have to continue?

Rod: They will absolutely have to continue it. And even, to your point, the smaller and mid-sized brands are going to have to offer as an option just because people are looking for that safety and convenience wrapped up into one. To me, the next innovation will be curbside return. Those who figure that out first, it will be really interesting to see if they can’t create a competitive advantage with that.

Tanya: That’s interesting. Are there many people doing that right now?

Rod: There’s no one doing it, that I’ve seen.

Tanya: Really?

Rod: That’s the next frontier.

Tanya: I just what? I just pull up in my car and roll my window down and return something or whatever? That’s great.

Rod: Long as it goes back on your credit card immediately, you’re in good shape, right?

Tanya: Yeah. Well, you wouldn’t think they’d be too tough of a nut to crack, right?

Rod: It shouldn’t be.

Tanya: You alluded to this earlier, that maybe with the exception of Dave who’s seeking all those deals and is going to spend a longer time seeking those deals, that shoppers plan to shop fewer days this year. What does that mean for retailers? This is a huge season for them.

Rod: It is a huge season for them. The ironic thing is that last year we had the smallest possible numbers of shopping days between Thanksgiving and Christmas. This year is more of a normal cycle where there’s four-plus weeks. What’s really driving it—there’s probably two things. One is just general uncertainty about their personal economic situation. My guess is they want to keep their powder dry a little bit longer and make sure that they feel good about their financial position going into the holidays. Perhaps that’s going to drive them to spend less time shopping, start to finish. I also think, though, that some of the challenges we found from a supply perspective may move them to shop earlier than they have [in] the past.

Tanya: What do you mean the challenges from a supply perspective?

Rod: The big challenge is you may not have what you want in stock. As we went through COVID, we exposed some of those challenges. Now, a lot of that was in consumable products. But at the end of the day, we’re finding that store inventories aren’t what they’ve been in the past for good reason. There have been a number of instances where folks have experienced problems getting packages delivered to the home, etc.

Maybe they’re a little bit leery about that and they know they need to shop earlier to be able to have the packages there in time for the holidays. That’s going to be part of it.

I also think the spike that we normally saw at the end of the holiday season, the week right before Christmas, I’m not sure we’re going to see that because that was largely an in-store phenomenon because folks realize they missed the shipping cut off, they went out to the store for the last minute items, etc. But given the reluctance to shop in store, with all the COVID issues, our guess is that folks will move their shopping up a little bit earlier.

Tanya: Yeah.

Rod: We actually asked consumers when they expect to start [shopping]. About 38% said they were going to start shopping before the end of October, so it’ll be interesting to see if they can pull more of the demand from November and December forward into October. We’re going to start to track that week to week.

Tanya: Rod, I want to know what is the number one thing that you want? What is on your holiday receiving list?

Rod: Outside of world peace?

Tanya: A good one.

Rod: That’s a great question. Probably a new set of irons, to be honest with you. I’ve probably played more COVID golf than I ever did before because I’ve never been home. It’s the first time I’ve gotten to play this much golf in probably 25 years.

Tanya: So I’ll just snip that out of the interview and send it directly to your family. There you go.

Rod: Please.

Tanya: Well, Rod, thank you so much. I think it’ll be interesting to see how this whole season shakes out.

Rod: Thanks for your time, as always.

Tanya: Rod Sides is vice-chairman and U.S. leader for retail and distribution for Deloitte Consulting LLP. We just scratched the surface on all the consumer insights they collected. You can find the full 2020 Holiday Survey at Deloitte.com/insights.

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