Optimize for These Holiday Retail Trends

With holiday shopping starting earlier each year, consumers are also making returns earlier too. As the season approaches, retailers need to be ready to handle these new behaviors. We took a look at our holiday data from 2018 to extrapolate trends to expect this year, and share some actionable insights for retailers to prepare for a successful season.

The peak shopping season starts earlier, even online

Traditionally, in-store shopping activity has peaked around Thanksgiving and Black Friday; as consumers shift even more dollars online, we now see online shopping spiking at that time as well, with the most package tracking activity taking place just a few days after that “opening weekend” in November. This year, it is expected that 63% of consumers will start their holiday shopping even before Thanksgiving.

Regardless of when consumers shop, it’s best practice for retailers to make sure customers get their packages when expected, and to proactively communicate the status throughout the journey. This becomes even more critical at the holidays, when consumers are especially busy and may not have time to follow up on every package they are expecting. Even if something goes wrong and the delivery is delayed, 98% of customers feel better about a retailer if they are notified as soon as possible. If the package is a gift, this early notice gives them the opportunity to come up with a contingency plan.

Give consumers confidence before they buy

Retailers that are able to show an accurate Estimated Date of Delivery (EDD) up front give consumers confidence and increase the likelihood of converting to purchase. Knowing when their package will arrive bolsters trust in a brand and helps customers plan for the holidays.

Customers also want more choices for how they receive their packages, with convenience being the primary driver. Options like buy-online-pickup-in-store (BOPIS) are becoming more commonly available through more retailers, along with lockers, and alternative locations like the Narvar Concierge network of over 8000 Walgreens and select Nordstrom stores across the country. About 16% of consumers we surveyed made their last return to an alternative location, and in just the first few months of making the Narvar Concierge network available to their customers, Dagne Dover has seen a 20% adoption rate.

Another way to instill confidence and improve conversion is to communicate return and exchange policies upfront. Customers expect the return policy to be readily available throughout a retailer's website, right in the path to purchase: 32% of customers want to see the returns policy on the product page, and 24% on the homepage.

The majority of returns happen much earlier in the season than you think

Last year, UPS predicted that returns were going to peak before Christmas, expecting over 1.5 million packages to be sent back on December 19. This seems counterintuitive to the traditional notion that the majority of returns happen in January after the holidays, but our data validates this — and shows that the peak was even earlier, on December 10. In fact, every one of the top 5 highest volume return days were in November or December.

Why so many returns so early in the season? We suspect this is primarily due to two key factors: consumers who take advantage of early sales want to get their money back as soon as possible if they change their minds or find a better deal, and consumers are bracketing gifts. Bracketing is a big driver of returns volume, as a customer will order different sizes, colors, or models to check out at home and return the ones that don’t work. In fact, 48% of consumers bracket purchases regularly, and we can assume they’re doing the same with gifts during the holidays.

Key opportunities to improve the returns experience

There are a number of ways to improve the returns experience and keep customers shopping with you throughout the season and beyond. Gift returns are an important opportunity over the holidays. Across the board, consumers found returning gifts harder than returning regular purchases — in the US only 57% found gift returns easy compared to 67% for non-gift returns. Compound this with our finding that new customers are 4x as likely as repeat customers to abandon a retailer based on a bad returns experience, and it’s clear that a focus on improving gift returns is critical to acquire new customers while keeping existing customers happy during the holidays.

Many retailers have started to offer new full-priced merchandise right after Christmas, taking advantage of traffic from shoppers returning or exchanging items as well as those with gift cards to spend. In addition to converting this traffic in stores, retailers can replicate a similar strategy online throughout the season by providing dynamic marketing assets for new products in their online returns & exchanges flow and increase incremental sales.

It’s also important to recognize that consumers are willing to make an online exchange if it’s easy and they don’t have to pay for shipping. Over a third of consumers said they would be willing to exchange an item instead of asking for a refund if retailers simply make it easy to swap for a different size, color, or item.

At the most basic level, consumers are looking for transparency in the returns process: 28% of customers say they were dissatisfied with the return process because their refund took too long, but being kept informed of the status of the return package & refund were consistently among the top reasons for delight. A good returns process not only refunds customers sooner if possible, but also gives them peace of mind by proactively communicating every step of the way.

So what does all this mean?

Understanding that both shopping and returns are at their highest volume earlier in the peak season means that retailers need to be prepared to provide a great end-to-end experience all the way through. Improving the returns process and offering easy online exchanges can not only help retain more revenue but also keep customers shopping with you throughout the season instead of shifting to another retailer who gives them more confidence in their purchases. Consumers are consistently looking for choice, convenience, and transparency from retailers, which gives them more confidence to make a purchase in the first place, as well as fostering trust and repeat business. Making these key improvements will pay dividends beyond the holiday peak, and increase loyalty and customer retention.