Surge in online shopping expected to grow digital sales by 90 per cent this holiday season
CPA Canada’s 2020 Holiday Spending Study reveals one in three respondents is planning to do the majority of their holiday gift shopping online
This year’s holiday shopping season will look unlike anything we’ve seen before, and not just because of social distancing. Digital consumer behaviour and the pressure on mail service is creating an unforeseen shift in what constitutes the usual seasonal rush, experts say.
This past spring brought an almost overnight influx of online sales as shops around the world closed. Digital transformation saw a five-year acceleration in just a few months, created by shifts in human behaviour due to the pandemic. “We anticipate 30 per cent of overall sales will go digital,” says Rob Garf, vice-president of industry strategy and insights at Salesforce and the chair of the Client Advisory Board for retail. “It took the retail industry 30 years to reach 15 per cent penetration and we’re going to hit 30 per cent for the holidays, creating a whole new baseline.”
With social distancing measures in place and more people choosing to stay home, a main driver of these digital sales will come directly through social media direct advertising. “Social will be a strong channel, with upwards of 15 per cent of mobile purchases being referred directly from social channels on the highest days of the season,” says Garf, adding that almost one in 10 digital purchases will be made directly through digital purchase points such as social media and messaging platforms.
CPA Canada’s 2020 Holiday Spending Study reveals a similar trend, with one in three respondents planning to do the majority of their holiday gift shopping online, compared to less than one in five the previous year. Also, 30 per cent of survey respondents plan to shop in brick-and-mortar stores, compared to 45 per cent in 2019.
The digital e-commerce demand is so strong this year that Garf estimates companies offering customer personalization and curbside pick-up options will have a 90 per cent increase year-over-year in digital sales.
The surge in online shopping generates huge demand for mail carriers. Just as the early pandemic months saw an enormous backlog of deliveries, the same is expected for this holiday season, with Salesforce predicting a risk of 700 million gifts arriving late. “To prepare, we recommend that consumers shop early or go for ‘buy online, pick up in store’ services to ensure you receive your gifts on time,” he says.
The anticipated delivery rush is so strong that Canada Post released a video asking consumers to shop early this year to help alleviate the backlog for their workers and to ensure holiday packages arrive on time. “We know how important these items are to you and we want to deliver,” says Rod Hart, chief customer and marketing officer at Canada Post, in the recorded message. “We also know there are many retailers of all sizes gearing up for your early shopping. We’re gearing up to help you and to help them have a great ending to a very challenging year.”
To compensate for the COVID-related behavioural changes, coupled with the usual holiday dash, Canada Post is adding more than 4,000 temporary seasonal workers and increasing its fleet by more than 1,000 vehicles. It will also do weekend deliveries in some areas and at additional pick-up locations, as well as extend post office hours. Additional processing equipment has also been added, along with enhanced tracking technology to help customers confidently follow packages.
Many stores are taking matters into their own hands to ensure packages arrive on time. Best Buy Canada has teamed up with mail carriers and is offering two-day shipping nationally and next-day delivery in major hubs such as Montreal, Toronto and Vancouver. “We’re encouraging customers to shop early and benefit from [fewer] crowds, more inventory and faster shipping, and we’re providing great deals over longer periods of time,” says Bryan Kooistra, chief financial officer at Best Buy Canada.
This year, the chain kicked off its holiday events early and, like many stores, is offering a combination of in-store shopping with strict social-distancing measures, online shopping with home delivery and curbside options, as well as creative add-ons. “For example, we’ve added additional online options like Blue Shirt Chat, allowing our customers to chat online with a store associate in real-time this holiday season,” says Kooistra.
Yorkdale Shopping Centre in Toronto is also preparing differently this year, especially since the city recently moved into another lockdown. They have added store-dedicated stalls outside the building so customers can drive directly to a store’s pick-up location to receive their order.
“The key difference between holiday shopping this year and previous years is that it will be a long game as opposed to the typical December scramble,” says Mina Barbuto, marketing manager at Yorkdale. Another emerging pattern is the volume people are buying at one time when visiting brick-and-mortar stores. “We are actually seeing larger purchases on average because when people come to shop, they come with a plan,” says Barbuto.
To come out on top though, the crucial element is making sure customers receive their goods regardless of the shopping method. “Retailers will be defined by their ability to address this head on and get creative around the ‘last mile’—the point between the store and the consumers’ doors—in order to win the holiday shopping season,” says Garf.
HOLIDAY SPENDING ON YOUR MIND?
See the 2020 Holiday Spending Study for more on how Canadians plan to spend for the festive season. And to learn about how the pandemic is affecting Canadians’ finances, see CPA Canada’s survey on the subject.