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The 40 Percent Solution: How To Capture The Balance Of Retailing’s Holiday 2020

In most years, Thanksgiving Weekend and Cyber Monday are a starting point for a lot of seasonal shoppers. This year, as has been observed many times in PYMNTS and other publications, however, is not like any other shopping season the U.S has ever experienced, thanks to the coronavirus pandemic and the digital shift for the U.S. consumer.

That shift is perhaps more immediately observable during the most wonderful time of the year — wherein it seems from a spending perspective the holiday shopping season didn’t so much start last weekend. Nor did it end, but according to PYMNTS’ most recent Black Friday data it did go sailing past the halfway point, with consumers reporting that as of Black Friday they had made 55 percent of their annual holiday shopping expenditures already — with only 40 percent left to capture this season.

The season isn’t so much revving up as already in full swing — and now the pressure is really on for retailers to switch up their holiday game plans as the clock is ticking and the pie is shrinking.

A Very Digital Shopping Season

While digital has been on the rise in seasonal shopping for the last several years, it entered the 2020 season on unusually strong footing. According to the latest edition of the PYMNTS Global Digital Shopping Index, consumers’ digital shopping channel use has increased by 60 percent since March 2020 — a digital drift that is now increasingly visible across all active consumer demographics.

Millennials still make up the largest share of shoppers who begin and complete their shopping journeys via mobile phones, but baby boomers make up 28.3 percent of “online natives,” those who begin and complete their shopping journeys via computer.

And while brick-and-mortar remains the most common shopping journey, the pandemic has notably eaten into that. Before March 2020 66.2 percent of consumers were mainly brick-and-mortar shoppers, while 59.6 percent say they still are. Conversely, the share of online native shoppers grew from 21.9 percent to 25.7 percent and the share of cross-channel shoppers increased from 7.5 percent to 10.9 percent as consumers have either shifted away from the physical store and moved to interacting with it differently than they once did.

Those digitized customers, the data demonstrates, are merging with different desires for their shopping journey — desires, the data indicates, that retailers are at times have some trouble meeting.

Pitching To The New Needs Set

What PYMNTS Global Digital Shopping Index indicates is that consumers are looking for a robust set of digital enhancements to their shopping journey — and data confirms merchants are having a mixed track record demonstrating understanding of that desire.

For example, PYMNTS research found that 38.3 percent of merchants think that consumers commonly use buy online, pickup in store (BOPIS) even though only 10 percent of consumers say they use BOPIS often or always. What consumers widely report valuing (56.1 percent) is free shipping for digital orders — approximately 1.6 times the share that merchants estimated. Consumers are also twice as likely to cite data protection as an important feature than merchants perceive they will.

The major point of alignment between these two perspectives between merchants and consumers is rewards. with 13 percent of each group regarding rewards as the single most important digital feature.

As for what consumers really want, heading into the back half of the 2020 holiday shopping season? The top performers in the current retail market are not the digital marketplaces one might assume, but merchants with both brick-and-mortar and online operations. According to PYMNTS Customer Satisfaction Index, merchants make 50 percent to 75 percent of their sales in-store versus online. Only half as many top performers are found among those who do most of their sales online and a tiny fraction of merchants that do their selling exclusively in-store. High-performing merchants in the index are also provide a wide range of digital features built to prompt customer convenience and security.

Because, as PYMNTS Black Friday data demonstrates, in 2020 convenience is king. Concerns over COVID-19 were primary among the factors that kept the bulk of consumers away from stores during the shopping weekend — but the craving for convenience also played a driving role.

Our research showed that 67.6 percent of all holiday eCommerce shoppers used online channels because they find shopping online easier and more convenient than shopping in stores, compared with only 47.4 percent who cited the fear of COVID-19 infection as their reason.

Product availability rounded out the top three holiday eCommerce drivers, with 47.6 percent of consumers reporting they shopped online because there is greater product availability online than in stores. Moreover, the data demonstrated that online shoppers’ payment habits have shifted some as well with a more diverse array of payment methods leveraged to make their Black Friday purchases in 2020 than in 2019.

Debit cards surpassed credit cards as the most common method in-store shoppers used to pay for their Black Friday purchases, with 48.6 percent using them to pay in physical stores this season — up 15 percent from 2019. This compares to 45.1 percent of Black Friday eCommerce shoppers who paid via credit card.

Debit card usage was also up among Black Friday shoppers who made purchases in brick-and-mortar stores, but debit was still less commonly used than credit cards. Our survey shows that 39.7 percent of Black Friday shoppers who made at least one holiday purchase online this season did so using their debit cards, up 7.3 percent from last year. This compares to 54.3 percent who paid using credit cards this year. Digital wallets also made a stronger year-on-year showing. PayPal, Google Pay, Apple Pay and Samsung Pay have all been up this season.

Google Pay and PayPal were the mostly commonly used digital wallets for in-store and online purchases, respectively. More than twice as many Black Friday shoppers paid for their in-store purchases using Google Pay in 2020 than they did in 2019, and 14 percent more paid for their online purchases via PayPal than did last year. This worked out to 5.5 million (9.7 percent) of all in-store Black Friday shoppers paying via Google Pay and 25.1 million (28.5 percent) of all online Black Friday shoppers paying via PayPal.

So how to capture that remaining 45 percent? The customers, it seems, are making it pretty obvious that what they want this year in the shopping experience is choice — choice in how they shop, where they shop and what they pay with when they are through.

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