Why retailers must act now to capture sales in the 'golden quarter'

As we enter the critical ‘golden quarter’ of 2020, retailers face a peak Christmas selling period like no other before.

To maximise their opportunities, retailers need a thorough understanding of how consumers are making changes to their lives as a result of the pandemic, and the actions they must take in response.

EY Malta’s latest Future Consumer Survey, which tracked consumer sentiment since August, shows consumer behaviour evolve from anxious to adaptation.

It is positive to note that respondents have a relatively better financial outlook today compared to our initial survey back in August 2020, where 12% of respondents had a negative perception now, compared to 19% previously.

Consumers are still proceeding with caution, as 57% are concerned about their spending compared to 67% in August.  20% plan to postpone major purchases compared to 45% in August.

Retailers must note that, while there is a reluctance to spend, there is still demand. Our survey indicates that 37% of respondents do not plan to participate in shopping events such as Black Friday and during the festive season.

The majority of those that will participate, at 35%, plan to do their shopping online rather than in-store. 31% plan to spend less than in previous years during these events, while 10% will spend more.

Retailers are going to have to work harder than ever to capture a reluctant consumer spend over December. Second wave fears and the imposition of restrictions mean the excitement of the instore Black Friday and Christmas experience will be partly lost this year. Getting online right will be critical for retailers.

But this means very different things for different consumer segments, and across different product categories. For example, there is a significantly higher propensity towards online shopping among respondents with the highest level of disposable income (73%) and millennials (64%) compared to 51% across the sample.

There is an increased level of consumer anxiety since our previous survey dated August 2020, which seems to be impacted by second wave fears. While respondents are generally comfortable to carry out various activities such as shopping for essential items, personal care and for medical purposes, there has been a deterioration in the number of people exhibiting this behaviour.

65% of respondents were comfortable going to a restaurant in August - this number decreased to 54% in November. Similarly, 47% of respondents are comfortable to go to a shopping mall, compared to 56% in August.

Marketing is key

In the short-term, retailers need to review their marketing strategies to ensure they can maximise the opportunities of what could be a dramatic reduction in spending. Online campaigns and capacity need to be maximised; and the technological and fulfilment infrastructure needs to adequately support online demand.

In the longer term, the online experience needs to be enriched with easy access to expert advice so that retailers can replicate the in-store benefits of physical engagement with both products and staff. Fashion retailers, for example, have started to respond to this trend with online stylist advice. Categories such as technology have an even greater opportunity to engage their customers through tactics such as video calls with consumers to help them choose the right product.

Retailers cannot afford to stay still in this constantly changing consumer market.

What would have been a 10-year transition has happened in less than a year, and retailers need to act now with agility and focus. Doing so now will maximise their chances of thriving into Black Friday and Christmas and taking advantage of future growth opportunities as we head into 2021.