This year has been anything but normal. In January, who would have thought that the whole U.S. population would be in their homes, schools would be on Zoom, and many of our favorite establishments would be closed?
By mid-March, kitchen tables became classrooms and bedrooms became offices for most of the population, except for the essential employees who put on protective equipment and headed to their jobs. Most of the rest of us changed our routines and our spending habits, opting for digital shopping in place of running to the store. The spike in online orders was so strong that many of the delivery companies could not keep up, resulting in delayed and lost packages.
To make up for lower store traffic, many retailers made changes to their business models, adding curbside pick-up, free shipping, extensions on reward points, and adjustments to their return policies.
Back to school shopping is typically a busy and vital time for retailers. But as June and July rolled around, there was so much uncertainty about what school would look like in the fall that retail stores began to question if that much-needed peak would come at all. For most, it didn’t. Stores that were open were at reduced capacity, with additional safety measures in place, and fewer staff.
Back in August, when asked, about one-third of consumers who typically do back to school shopping said that they were holding off until their districts finalized the back to school plan. Now, halfway through fall and a surge in COVID-19 cases, most students in the U.S. are still attending school virtually. Certain retailers, like those that sell computers or other online learning equipment, saw a sales increase over previous years as school districts finalized plans for virtual classes. Other retailers, like those that sell apparel or shoes, saw no such spike.
The Cost of Losing Back-to-School Sales
We won’t know the full extent of the retail damage until we know when most kids might return to school full time. I think that there are three scenarios:
- Schools open fully. In this case, there will likely be parents who do their usual back-to-school shopping. However, spending will be spread out and retailers won’t experience the spike in sales, but they will experience higher-than-normal sales throughout the remaining weeks of fall.
- Schools go back in January. In this case, back to school shopping will bleed into holiday shopping, which may cause stock outages and delays in shipping products.
- A return to school is spread throughout winter and early spring. In this scenario, there will be some additional spending based on items that students grow out of, but not to the extent of traditional back to school shopping.
Has COVID Permanently Changed Our Shopping Habits?
Throughout April and May, many digital consumers reported that they were shopping digitally because they were unable or uncomfortable going into a store. In the fall, those numbers dropped somewhat.
When people start to think about holiday shopping, there are indications that they will shop earlier than normal, and a much higher percent will do their shopping online instead of in the store. Early research suggests that consumers will place online orders earlier to ensure that shipments arrive on time due to delivery issues experienced in March and April.
Many retailers tried to capture some of these additional sales by releasing Black Friday deals as early as October in an attempt to entice their followers to purchase gifts earlier.
The majority of consumers report that they will do at least some of their holiday shopping online this year, and that free shipping is one of the most important considerations when deciding where to shop.
Those retailers who have adjusted inventory to accommodate early holiday shopping will likely come out on top this holiday season. The difficult bottom-line conclusion is that the 2020 back-to-school shopping season may be almost non-existent for many retailers. But those sales may be re-captured whenever students do return in person. Additionally, all the changes we’ve gone through—becoming more comfortable with digital purchasing out of necessity—could cause some major and permanent changes to the retail industry. Smart, experience-savvy stores will seize on that opportunity by keeping the changes they’ve deployed in the face of crisis (BOPIS, curbside pickup, etc.), and even finding ways to expand on such customer conveniences.
Written by Becky Anderson, Retail Customer Success Manager