It’s October and Halloween prep is in full swing, that also means the holiday season is creeping (get it?) that much closer.
I recently published some results from our 2018 holiday retail survey that showed retailers were generally more optimistic about their 2018 holiday sales than what actually transpired. This year, there are a number of factors that could affect holiday sales both positively and negatively.
In general, the holiday sales trend has been steadily marching upward since 2009, with each year’s sales exceeding the previous. This year is no different. NRF predicts that 2019’s holiday sales will grow between 3.8-4.2% over 2018. Despite fewer days between Black Friday and Christmas, Salesforce predicts e-commerce sales will grow 13% this year. On the heels of Amazon’s most successful Amazon Prime Day, it’s a high possibility that Amazon will reap most of these benefits, but other retailers in the e-commerce sphere also have a chance to succeed.
Consumers are not generally aware of these trends, and growing economic anxiety might impact sales. With fears of a looming recession and political unrest across the globe, there are a variety of factors that could impact consumers’ holiday shopping plans. Despite this, 2019 will likely be a banner year.
Retailers’ holiday tactics
There are many ways retailers prepare for the holiday rush. Some include technology and software, but some businesses simply hire more employees and order more inventory to prepare for the holiday season. For instance, 74% of respondents told us that seasonal hiring is either important or very important to their holiday strategy. The adage is true: many hands make light work; but, for a business, extra help is also an additional cost.
Nevertheless, roughly 80% of small companies (those with under 250 employees) predicted that longer employee shifts were important to very important, but only 54% reported that was actually the case in our follow-up survey. This might be an attempt to get more out of the employees businesses already have to avoid seasonal hiring, but considering 2018’s holiday season was an overall disappointment, it may be that foot traffic was not as high as retailers expected.
Compared to retailers, G2 is more concerned with the technology retailers use as opposed to their staffing strategies. According to our surveys, 46% of companies who did not utilize extra technology during the holiday rush had fewer than 100 employees. This could be due to budget concerns, since software can be a significant investment. This could also be caused by the fact that small retailers may not know which solutions will be the most useful for their business.
Only 19% of businesses with revenue below $5 million rated technology as very important. Interestingly, this is the highest percentage of respondents compared to all the revenue segments, closely followed by businesses who make $5-$24 million and those who make over $1 billion; both had 16% of respondents say technology is very important. It makes sense that respondents in the highest revenue bracket would rate technology as highly important, since these are businesses with multiple stores and large operational needs that require software to run smoothly.
What is slightly more puzzling is the large drop-off in the $25-$99 million segments and the $500 million to $1 billion segments. While this may be due to the respondents’ roles and their relationship to technology used by their businesses, the discrepancy is interesting. Larger companies will have more employees who only use a few of the software products the company at large utilizes, so each individual employee may not have a window into how particular tools contribute to the business.
Source: G2 Survey
E-commerce site performance
Crashes and outages are an unfortunate yet unavoidable consequence of technology. For consumers and businesses alike, these crashes can derail the holiday shopping season. If purchases can’t be made, customers have a bad experience and businesses aren’t making money. It’s a lose-lose situation.
Sadly, outages and problems are not uncommon in the commerce industry. Websites and software can be overloaded by high volumes of visitors, precisely what happens during the holidays and shopping events like Black Friday and Cyber Monday. While these issues can happen any time of the year, the impact is more severe during the holidays because of the high volume of sales and the urgency of different holiday deals.
Switching software can be expensive and time-consuming, so it’s not smart to do during the holiday season. Once the holidays are over and the volume of sales decreases, the problem recedes into the background. If a business hasn’t chosen a tool that effectively scales with increased need or as the business grows, these problems are practically inevitable during the holiday rush. Smaller retailers are also unlikely to spend money and resources on a dedicated IT team that can detect and fix issues as they arise.
We asked respondents whether they have experienced different problems with their e-commerce site during the holidays, including hacking, data breaches, DDoS attacks, website crashes, or significant downtime. Before the holidays, 58% of respondents had experienced website crashes, 26% had experienced significant downtime, and only 10% had experienced a data breach. After the holidays, only 43% had experienced a website crash, 23% experienced significant downtime, and only 5% experienced a data breach. The number of respondents reporting hacking jumped from 9% before the holidays to 14% after.
The fact that most problems decreased after the holidays could indicate a myriad of things. It might mean they experienced fewer technological difficulties than expected. It may mean that businesses have switched to more reliable technology than what they used in the past, they are using their technology more effectively, or that technological issues seem more significant in the past than they are in reality.
While it is unlikely that any business relying on software (which is essentially all of them) will exit the year unscathed, there are strategies to reduce potential threats. Accurate forecasting can help significantly with determining whether or not a business is adequately prepared. Retail analytics software, e-commerce analytics software, and business intelligence platforms can all provide predictive analytics to help prepare businesses for the holiday rush. If you are expecting one million customers but your systems can only accommodate 600,000, then some scaling is necessary to adequately prepare. While more employees help alleviate this issue somewhat, they may also overload your existing systems by creating more concurrent users.
How to prepare for the 2019 holiday season
Every business is unique, so there is no one size fits all solution. 2019 is predicted to surpass 2018 in sales, but there are extenuating factors that might affect both businesses and consumers. Retail sales have been doing well throughout the year, performing better than expected. That will likely lead to record-breaking holiday sales, many of which will be made online.
Overall, my advice to retailers is to create a robust online presence if you haven’t already. If you already have an online store, ensure that it can handle a larger volume of customers. Depending on the e-commerce platform you use, this may or may not be in your control, but knowing that it is a possibility can make a difference. If you do experience a crash, communicate with your customers via social media to provide regular updates. Sometimes, all customers want to know is that a company is taking action.
There are thousands of software tools that can help a commerce business scale for the holiday season. The best way to find the best fit for your business is to audit your company for weaknesses and strengths to find solutions that amplify its strengths and bolster its weaknesses.
Lauren is a market research analyst focusing on the e-commerce and retail industries. Since joining G2 in July 2017, she has focused her energy on consumer-driven spaces after spending time in the vertical, design, and CAD software spheres. She graduated from the University of Chicago with a degree in English language and literature and her writing and research has been cited in publications such as Forbes, Eater, and Nasdaq.com, among others. She enjoys building and sharing her knowledge, and in her free time enjoys reading, knitting, and gaming. Her coverage areas include retail technology, e-commerce, and restaurant technology.