2020 Holiday Spending Insights Report: Shoppers are looking for convenience and protection from COVID-19
While the future of the pandemic is difficult to forecast, consumers aren’t letting uncertainty rain on their holiday shopping plans — and merchants should prepare their in-store shopping experiences accordingly.
In October 2020, we polled both consumers and merchants across the U.S. to help paint a picture of what purchasing for the rest of 2020 and into 2021 will look like. Data revealed that both hygiene and convenience will be key players this holiday spending season — and consumers have come to expect both. Contactless payments cover both needs, and with their use among consumers already on the rise, continued adoption by merchants could be the key to success now and in 2021.
Use the following insights to guide your retail payments strategy going into the holiday spending season and help your merchants find success after an unprecedented year.
To compete, elevate your in-store experience
According to our data, U.S. consumers are planning to turn out this holiday season, with optimistic spending plans:
- 62% of consumers polled plan to spend at least the same amount as they did in 2019.
- 30% of consumers polled plan to spend more than they did in 2019.
And despite the recent trends toward ecommerce, many consumers plan to shop for gifts in-store at brick-and-mortar locations:
- 29% of consumers polled plan to primarily shop in-store.
- 40% of consumers polled plan to shop both in-store and online.
However positive these projections seem, they are not a green light for merchants to sit back and watch the profits roll in. This holiday spending season is still unlike any other and there are new considerations to add to the mix. While 58% of merchants polled already anticipate a mix of both in-store and online shoppers, what does this mean in terms of preparation in the middle of a pandemic?
Merchants from our poll revealed they are concerned about the cost of COVID-19 precautions and working with reduced headcount during the busiest spending season of the year. Then there is the competition to consider: 44% of consumers say they plan to spend primarily with big box stores (e.g., Target and Walmart) on Black Friday — and it’s nearly impossible for most businesses to beat out big box prices.
Outside of product price, what else do merchants, specifically SMBs, have in their toolboxes to ensure an in-store experience that can compete during an unprecedented spending season?
The answer: Elevating in-store experiences when it comes to both health and safety, and payments.
While consumers are and will always be cost-savvy, this year they are looking for more. When asked which factors will have the most impact on their choice of retailer on Black Friday, 47% of consumers said store sanitization, 45% said social distancing guidelines, 43% said convenience of purchase and more than a quarter (27%) said the availability of their preferred payment methods. Merchants, especially SMBs, should plan on delivering all four of these factors to stay competitive this holiday season.
Stand out this holiday season by exceeding health and safety expectations
Before considering convenience, merchants and the payment partners who serve them, should ask, “what’s my plan for keeping both consumers and employees safe and healthy this holiday shopping season? Does it stack up to consumer expectations?”
Consumers rate the following as the top five most important in-store health and safety protocols that will make them feel comfortable on Black Friday:
- Hand sanitizer (80%)
- Masked employees (60%)
- Sanitizing wipes (55%)
- Social distancing floor makers (55%)
- Disposable masks (for customers) (49%)
Additionally, 41% of consumers expect merchants to disinfect their point of sale (POS) areas after every customer during the holiday shopping season. But as evidenced by the above list, it doesn’t require an elaborate or expensive plan to meet consumer health and safety expectations. In fact, the majority (58%) of merchants plan to spend $200 or less per week per store to keep their point of sale (POS) areas clean.
However, with steep competition and a volatile pandemic, doing the bare minimum when it comes to health and safety may not be enough, especially when you consider that 46% of consumers revealed they are more likely to trust that big box stores are properly sanitized than small, local businesses. For this reason, 49% of merchants plan to implement additional health and safety protocols to prepare for the holiday spending season, and 41% are limiting capacity.
While consistent, elevated health and safety protocols will encourage customers to step inside, it doesn’t guarantee a purchase. So merchants should take it a step further: Ensure a high level of hygiene extends to the purchasing experience by offering the contactless payment options customers have grown to expect during the pandemic. Doing so also introduces a far stronger, longer lasting incentive to purchase: convenience.
Offer contactless payments to ensure both convenience and a high level of hygiene
Our poll revealed that nearly 30% of consumers feel uncomfortable using cash to make purchases right now. Contactless payments, including tap-to-pay cards as well as mobile wallets like Apple Pay and Google Pay, offer a high level of both convenience and hygiene — making them essential since the start of the pandemic. In fact, over half (53%) of consumers polled use contactless payments “very often'' or “often” when shopping in-store during COVID-19.
Contactless adoption will only continue to accelerate as consumers embrace these payment methods as the status quo. Already, 78% of merchants polled accept contactless payment methods and over half (57%) have invested in contactless payment methods since March 2020. Even more, while merchants polled say their customers’ most common in-store payment methods are still credit and debit cards, 30% would prefer if their customers’ most common in-store payment method was contactless this holiday shopping season, signalling more adoption to come as we enter the final months of the year.
Contactless payments are not just a casual consumer preference or a retail trend to slowly join — merchants stand to lose sales by not offering contactless payment options during this holiday spending season. In fact, due to the pandemic, 43% of consumers actively avoid shopping with merchants that don’t offer contactless payments.
Contactless payments are just the start — the secrets to success are convenience options and payment agility
Contactless payments aren’t just a trend — they’re here to stay. Customers aren’t going to revert to less convenient payment options just because the virus has passed.
But even more, guaranteeing the staying power of contactless payments hinges on combining them with other convenience measures, e.g., pairing contactless payment options with curbside pickup, pay-in-app and loyalty program integrations. This convenience will inspire customers to come back and shop again and again, which is far more valuable than a one-time holiday purchase.
Adopting contactless payment methods now covers all bases: payments convenience, and health and safety. But your merchants may be thinking, how can this be deployed in time for the season? And they aren’t alone: A lack of the tech infrastructure to support contactless payment methods is the main barrier to adoption for 32% of merchants surveyed.
Terminal-based payment innovation is antiquated. Today’s cloud-based payments infrastructure can be up and running in as little as 72 hours— ensuring success for your merchants during the holiday spending season. But even more, implementing a cloud-based payments solution ensures success in future holiday seasons because it allows for agility, supporting more ways to pay and further innovation.
Ready to take payments to the next level? Contact us.