Holiday Shopping in 2020: a behavioral science perspective

It’s been… a year.

Amid a U.S. presidential election and global pandemic, we’re entering the most unusual holiday season any of us have experienced before.

There’s been a lot of talk about all of the unprecedented this and adapting to that happening to consumers. And no time is this more evident of real behavioral changes than the holiday shopping season.

With the pandemic serving as a sort of catalyst to online purchasing and more digital services, the typical shopping habit cycles have been interrupted.

But what are habits? The habit loop is a tripart cyclical pattern consisting of cues, routines and rewards which strongly influence decision making by minimizing the cognitive effort. Your memory links the habit to specific contexts such as people, places, items, or times typically present during the overall repeated experience to sort of earmark when and how to do what needs to be done. The things that make up a habit include cues, routines, and rewards.

  • Cues: Kicks the brain into automatic mode telling it which habit to use
  • Routines: Physical, mental, or emotional response
  • Rewards: Prize telling your brain “this loop is worth remembering for the future”

Repeating the loop builds the strength of the habit to the point where it becomes part of our lifestyle. Consumer decision making relies on heuristics to help us decide which routines are most appropriate to get our desired outcomes. When it comes to shopping, certain cues from advertising, or layout of the products in the stores, or maybe special sales initiate the purchasing routine. Consumers are creatures of habit.

Breaking these habit cycles, our consumer lifestyles, can be challenging to say the very least.

According to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, and 80 percent fail (2016). Christensen, widely regarded as one of the world’s top experts on innovation and growth and author of the theory of disruptive innovation, suggested that companies often fail in introducing new products because they study the wrong product and consumer data, leading them to unwittingly design innovation processes that “churn out mediocrity.”

When it comes to holiday shopping in 2020, the typical routine had to change. The 2020 holidays have truly tested retailers’ flexibility and adaptability.  With limited indoor everything, retailers adjusted sales from Black Friday (which became Black Friday Week) to Amazon Prime day being shifted earlier. An increased focus on health and safety, combined with financial concerns, has resulted in a shift in the way consumers spend their holiday budget.

More consumers are shopping online, a move that arguably would have happened despite COVID. For consumers, the movement toward digital has shown them the benefits and ease of online shopping, particularly in categories they previously might not have considered before the pandemic, such as groceries and household essentials. But also in planning, planning for seasonal changes and holiday gift buying.

2020 has also affected marketing plans. Advertisers, tasked with getting ahead of these adjusted habits, where shopping has started earlier and earlier, have had to find new ways to target consumers given their newfound buying behaviors. As more consumers spend time with digital content, advertisers have had to compete for screen space. Visibility will become more and more crucial for brands for a successful holiday season, and beyond. With the season starting earlier than ever, the annual spike in demand has lasted even longer than usual, making it that much more challenging (and important) to stand out amongst the crowd.

What can marketers do?

Make it easy:

It will be most important to provide an optimized, seamless digital consumer experience to meet consumers’ new expectations and needs. Innovations in e-commerce and advanced technology are getting better at creating a frictionless experience for online shoppers, which is especially important given consumers’ concerns about their health and safety. Retailers need to focus on addressing the customer service issues that will inevitably arise with the shopping season, particularly with the spike in online shopping. Improvements to e-commerce or mobile capabilities, as well as curbside pickup and returns, could help attract shoppers.

Watch your tone:

Given the uncertainty that the pandemic (and everything else with 2020) has brought, the tone of messaging of advertisements is more important than ever. Consumers want reassurance from brands they trust. Advertisers will need to double down on feel-good campaigns and end-of-year sales to make up for lost revenue and foot traffic during mandatory stay-at-home orders.  Providing authentic, personalized experiences, optimized content, and advanced audience targeting are key, but winning consumer hearts will require reaching them in the first place (and holding their attention long enough to make a meaningful connection). With many holiday shoppers avoiding physical stores to some degree, advertisers will need to look to meet consumer needs by focusing their marketing efforts on placing contextually relevant digital ads in safe and suitable environments. As always, context is key and awareness of this will be paramount in constructing marketing plans.

As always, HCD is happy to help with all of this with customized approaches to brand harmony and identifying consumer need-gaps. Our behavioral approach, combining psychology and neuroscience, has proven to be a winning way to better understand and meet consumers’ changing needs amid all the chaos of this past year.

As always, we’d love to hear from you, so please don’t hesitate to reach out with any questions or thoughts.


References:

The Power of Habit, by Charles Duhigg

Christensen, C.M., Hall T., Dillon, K., Duncan, D.S. (2016). Competing Against Luck: The Story of Innovation and Customer Choice. HarperCollins Publishers, New York.