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By the Audit & Quality Control Team, Incubeta UK
As England enters the third week of our second national lockdown, many have been left wondering how the retail industry will fluctuate this festive season in comparison to previous years. With the UK spending over 98 Billion GBP in 2019, a 1.8% increase from the previous year, questions are being raised on the transformative effects coronavirus is having on shopping habits.
There’s no doubt in anyone’s mind that the pandemic has altered the seasonal dynamics of the festive period. Economical uncertainty and personal finances has led many consumers to do their holiday shopping early, and as behavioural patterns change, so do industry trends and marketing campaigns.
Using the Google Store visits trend from a sample of our clients we saw a mini uplift in store visits from the day of the announcement (31st Oct) up until 2 days before the lockdown came into effect, meaning shoppers flocked to the high-street in a last minute attempt to make their festive purchases before the retail restrictions were re-introduced. Store visits then dropped by >50% when the lockdown started on the 5th November.
With the number of store visits dropping by >50%, we once again saw a substantial uplift in online traffic as consumers ditched the high street and switched back to digital shopping. Comparing data from the first 10 days of lockdown (5th-15th Nov vs the prior 10 days) online revenue is up 60% in England (compared to 29% in Scotland and 12% in Wales), with conversion rates up by 24%.
This shift in conversion rates started around the 1st November, just after the second lockdown was announced:
What we can learn from the last lockdown
As a result of coronavirus, and the subsequent global lockdown, there are two different types of trends that have emerged over the course of the year; Shock and Sustainable. Shock trends refer to the sudden rapid consumption of certain products such as toilet roll, canned goods and dried pasta – which went as fast as they came. And Sustainable trends refer to the trends that have fluctuated, but stayed constant throughout the year, such as the ones we identified earlier; online yoga, alcohol delivery and online games.
Although speculative, the consumer behaviour that arose from the last lockdown is a good indication, or predictor of what we can expect this time around. Similar to what we saw in March, we’ve seen a huge rise in digital ecommerce with a 60% uplift in online revenue since the start of the second lockdown, and a 24% increase in conversion rates. However, due to the timing of this lockdown, we have seen some characteristic differences between product preferences and consumer habits, with Christmas decorations and gift hampers replacing the demand for bread-making kits and gardening equipment that we saw in March.
What does this mean for the Q4 holiday season
With the Q4 peak of the Black Friday – Cyber Monday weekend (27th-30th November), set to take place completely during Lockdown 2.0, online retailers who can accommodate the increased demand on their supply chain, stock levels, delivery and customer service teams, are set to see record breaking online growth this holiday season
We have already seen a significant uplift in year on year growth since the start of the November lockdown, with online revenue growth across our retail clients accelerating by a further 94% on average during the first 10 days of lockdown (239% uplift YoY) compared to the already significant year on year average growth of 146% seen in the 10 days prior to lockdown.
Many advertisers have responded by launching Black Friday offers even earlier this year, in a bid to avoid a large spike in orders over the Black Friday/Cyber Weekend period, thereby reducing the pressure placed on distribution centres and maintaining appropriate social distancing regulations. However the YoY CPC growth we’ve seen so far, has not exceeded what we saw pre lockdown.
Research has shown that 46% of UK Adults are planning to take part in Black Friday sales this year, with nearly a quarter of shoppers willing to wait in a virtual queue for more than an hour in order to grab a bargain. With many people working from home during the lockdown, 17% will be prepared to wait in online queues whilst working, which will likely shift a higher proportion of sales to earlier in the day than seen in previous years. The research also highlights that, despite a significant 40% of shoppers being disappointed with an online purchase, only 14% would go to the trouble of returning a purchase – a trend which will likely increase as many shoppers who traditionally do their Christmas shopping in store are forced online due to current retail restrictions.
So what can we expect to see in terms of performance for the remainder of the Holiday season? Based on current trends and the timings of this year’s Black Friday weekend, our expectation is that the revenue trend for the remainder of Q4 will look something similar to the chart below, with two potential scenarios from the 2nd December – which will be very much dependant on whether or not the England lockdown is extended, and whether retail restrictions on the high street will remain:
Product & Category Trends
So what re-emerging trends have we seen so far in the second lockdown? Coronavirus has undoubtedly caused drastic shifts in consumer behaviour throughout the period of lockdown, and this is no different the second time around. Search volumes for “Alcohol delivery”, “Yoga Online” and “Online Games” continue to trend well above the pre-corona levels. And with the launch of new home entertainment systems (such as PS5/Xbox) this month, we will undoubtedly see the gaming category rise as we get closer to Christmas.
We can also expect to see a secondary uplift in ‘Click and Collect’, ‘Home Delivery’ and ‘Take-Away’ trends throughout this lockdown due to physical retail restrictions. Businesses should plan their logistics and advertise their home delivery cut-off dates early to avoid client dissatisfaction and disappointment.
With the current UK retail restrictions, and nonessential stores only opening for click & collect, the focus is back to ecommerce, as the only place for consumers to browse is online. As a result “Christmas gift” and “Christmas decorations” shopping started earlier this year than in 2019.
We also saw trends emerging in the popularity of Gift Hampers and Baskets. As lockdown measures tighten, interest for hampers and baskets is rising – compared to previous years where they only gained popularity closer to Christmas. This trend is expected to increase as we move towards the festive period.
Hot or not?
As the weather gets colder, search trends increase drastically, with products such as loungewear, pyjamas, socks and slippers all seeing an increase in popularity YoY. This is no different to what we’re seeing now, however the lockdown period has triggered an uplift in these search terms significantly earlier than in previous years.
It will come as a surprise to no one that last year’s uplift in search volume for “Party Dresses” is unlikely to be repeated this year. Consumer interest in both “Heel Shoes” and “Men’s Suits” plummeted in March, and has not recovered since.
Certain verticals, such as Home & Garden and Gifts & Special Event items saw a significant and continual uplift in searches since the March lockdown. Following the second national lockdown announcement on 5th of November 2020, it is interesting to see which search volumes are trending up again. We found there to be particular uplifts in; Computers & Electronics, Beauty & Fitness and Hobbies & Leisure.
Verticals that saw a big hit following the March lockdown were: Travel, Sports and Jobs & Education. Interest in real estate and vehicles saw a temporary drop, followed by a gradual increase, putting them back to (almost) pre-corona levels last week. The second lockdown has had the biggest impact on Travel and Sports, with travel suffering most from the second hit as they were still struggling to recover from the first.