4 ways shopping for the holidays is going to be different this year

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Noam Galai | WireImage | Getty Images

Not even Santa knows what this holiday season is going to put under the tree for retailers. 

The challenges brought on by the coronavirus pandemic have upended the retail industry – forcing stores and malls temporarily shut, pushing some companies into bankruptcy court and accelerating store closures. It has instilled new behaviors in consumers, who are spending more time and money online — a trend that could become permanent. Long-standing holiday shopping traditions are also being tested. 

“This holiday is going to be unlike any holiday season I think any of us have ever seen before,” Levi Strauss & Co. CEO Chip Bergh told CNBC earlier this week. 

Many analysts expect the season to kick off next week, with the start of Amazon‘s annual Prime Day shopping extravaganza. The event, which usually takes place in July, was delayed by the pandemic. TargetWalmart and other retailers are also vying for consumer attention with their own deal days, some of which precede Prime Day’s start on Tuesday. 

Here are four key ways shopping during the holidays is changing this year. 

Shopping starts now

The consensus is shoppers won’t wait for Black Friday to begin tackling their gift lists.

Three in 10 consumers say they expect to start their holiday shopping earlier than usual this year, while one in 10 say they expect to procrastinate, according to a study by Coresight Research, which surveyed 1,116 U.S. internet users over 18 years old last month. 

Retailers will do all they can to coax those procrastinators. The industry’s leading trade group, the National Retail Federation, recently debuted an ad campaign, “Shop safe, shop early,” to discuss the health benefits of shopping when stores are less crowded. 

Retailers are also looking to avoid last-minute logistical nightmares, which can drive up their costs. That’s why they have already stocked the shelves with red and green decor. And Home DepotBest Buy and others are doling out deals on tool kits and electronics in the weeks leading up to Thanksgiving. Busting down the door for Black Friday bargains will likely be a tradition of the past. 

“We’ve seen some data that says customers will be looking for value earlier and participating less in that all-important one-day event in stores,” Bed Bath & Beyond CEO Mark Tritton said in an interview. “It’s a very different season. And I think we’re all going to learn together as we go through it.” 

Salesforce estimated as much as $6 billion of retail spending in the U.S. that tends to take place during Cyber Week in November — and as much as $26 billion globally —  is expected to be pulled into October this year.

Prime Day itself could pull forward as much as 10% of the traditional Cyber Week’s digital revenue, Salesforce predicted. 

Target Team members meet before Black Friday in Chicago.

John Gress | Corbis | Getty Images

Load up the online carts

With some areas starting to see a resurgence of Covid-19 cases, and with the looming threat of the cold winter months sparking more coronavirus spread, many consumers will be staying at home and browsing the web for their holiday gifts this year. 

Deloitte expects holiday e-commerce sales to surge by 25% to 35%, amounting to between $182 billion and $196 billion, compared with year-over-year growth online of 14.7% in 2019, when sales amounted to $145 billion. 

If they haven’t already, retailers are rushing to invest more in digital to make sure they can meet the heightened traffic on their websites and mobile apps. Some, like Gap, are looking to quickly bulk up their call centers and warehouses with extra workers. Bed Bath & Beyond just rolled out same-day delivery. Zales owner Signet Jewelers said it has made investments at an Ohio warehouse to be able to ship five-times as many packages as a year ago. 

Companies like Target and Best Buy are also pushing curbside pickup options for online orders — as a way for shoppers to quickly retrieve their items, while saving the company money that would have been spent on extra packaging and shipping. 

“It’s no longer about products, pricing and promotions. It’s prepare, perceive and then pursue,” said Michael Brown, a partner at consulting firm Kearney’s consumer products and retail practice. “We know consumers are going to increase their e-commerce shopping. As a retailer, how do I get that into their hands in a cost-efficient manner?” 

One thing, though, that could drive some sort of rebound of in-store shopping late in the season is the promise of an effective Covid-19 vaccine, said Rod Sides, a vice chairman at Deloitte and its retail and distribution sector leader. But that’s still highly unpredictable, and not something retailers should be betting on, he said. 

A UPS worker sorts packages in New York on Dec. 18th, 2017.

Adam Jeffery | CNBC

Warning: Shipping could be a nightmare

Such a big surge in online shopping is likely going to create bottlenecks in the delivery process, delaying packages from arriving at doorsteps. 

Salesforce is projecting parcels shipped by traditional delivery providers — such as FedEx, UPS and DHL — will exceed capacity by 5% globally between the week before Cyber Week and Dec. 26. That means potentially 700 million gifts are at risk of not arriving to homes before Christmas, it said. 

And Salesforce is calling for retailers globally to face roughly $40 billion of Covid-19 delivery surcharges between Nov. 15 and Jan. 15, as shippers prepare for the strain. 

Some CEOs have acknowledged this challenge, and are actively looking for solutions before the rush hits. 

“We know that important last week before Christmas, that we have to have all fulfillment options on the table, knowing that … there may be supply issues or there may be cut-off issues,” Macy’s CEO Jeff Gennette said during Goldman Sachs Global Retailing Conference last month, referencing the department store chain’s buy online, pick up in store offering, and curbside pickup. 

“We want to make sure that the Macy’s customers and Bloomingdale’s customers have their gifts before Christmas or Hanukkah,” he said. “We also have improved our customer communications on delivery options and expectations of delivery.” 

In the past, shoppers might have been able to order something online just two days before Christmas and still receive it in under 48 hours. Analysts say don’t expect that this year. Some have said shipping cut-offs for delivery by Christmas Eve might come as early as Dec. 15. 

“For consumers, that means if you see something you like and it’s out there early, you might want to scoop it up early,” said Craig Johnson, president of the retail consulting group CGP. 

What shoppers will be wrapping 

With many Americans putting travel on hold and entertainment venues either closed or preceived as risky places to visit during the pandemic, gifting an experience this holiday season is a lot harder. 

Nearly seven in 10 people, or 68.9% of respondents, said they are shifting some of their spending from services to retail products because of Covid-19 restrictions, according to Coresight’s poll last month. 

To put into context how much money could be up for grabs for retailers: During the 2019 holidays, consumers spent about 12% of their holiday budgets on services, like food, travel and sporting events, or about $450 billion, Coresight said. 

Analysts expect spending could pour into categories like at-home fitness equipment, comfortable clothing, beauty products, desk accessories and home decor, as Americans look to exchange reasonable and useful gifts during a pandemic. 

How Americans spend the holidays with their loved ones, though, be it in-person via small gatherings or virtually, could also impact what items people are gifting this year. 

“The consumer is used to buying all these gifts, wrapping them and putting them under the tree,” said Kearney’s Brown. “But even gift buying might be suppressed as we have Zoom gatherings, and families don’t get together, so they send smaller gifts.” 

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