Retail’s transformative year: New Google research shows the impact of COVID-19 on holiday shopping

It’s been a historic year for the retail industry. The pandemic fast-tracked digital trends that the industry had been pondering over the previous decade, separating retail leaders and laggards. What were once nice-to-have technological differentiators became necessities when the pandemic hit. 

As retailers scrambled to digitize, consumers took to online shopping unlike ever before. Brands and stores quickly launched new contactless delivery systems. Inventory management became even more complicated across the supply chain. And the looming holiday shopping season created uncertainty and stress for their businesses.

To understand COVID-19’s impact on the retail industry and its effect on the holiday season, we recently commissioned The Harris Poll to survey retail executives and better understand the challenges and opportunities retailers face. Below are a few of our key findings for 2020. 

COVID-19 Exposed Retail Weaknesses and Sparked Concern Globally 

As with most industries, the sudden sweep of COVID-19 took most retailers by surprise, exposing massive weaknesses in their infrastructure. Less than half of retail executives globally (43%) felt that their companies were properly equipped with the right technological tools to maintain business continuity in the early stages of the pandemic. And those concerns have not disappeared. Looking ahead, only about half of retail executives (51%) say their company overall is very prepared to deal with the shifting retail landscape that has taken place due to the COVID-19 pandemic.

Stay-at-home orders created a ripple effect in the industry, especially within ecommerce. In last year’s research study, we found that website performance was among the top concerns for retailers during peak seasons, like the holidays, with 10% of US respondents experiencing a website outage within the previous year. 

This year, that increased by a whopping 7%, with nearly 1 in 5 (17%) U.S. respondents saying they had an outage in the last year, likely due to the early days of the pandemic when demand skyrocketed. This concern echoed globally, as the same percentage of global respondents (17%) said they experienced a website outage within the last year. Overall, more than 3 in 4 retail executives (77%) mentioned their company’s website has experienced an outage at some point during peak holiday traffic.

More Confidence in Ecommerce Performance for the Holidays

However, despite these concerns, retailers have adjusted through the use of technology. With more shopping happening online than ever before, retailers have prioritized their ecommerce sites to keep businesses running. Executives globally feel their ecommerce sites (60%) and IT teams (59%) are now “very prepared” to deal with what’s to come, including this current holiday season. 

The pandemic served as a test of peak season, preparing retailers for an online-dependent holiday shopping season. The work many retailers did in the beginning of the year to accelerate and modernize their ecommerce infrastructures eased their concerns. For example: 

• Most retail executives reported being very confident (61%)–and feel their companies overall are very prepared (62%)–to deal with increases in consumer traffic this holiday season.

• Virtually all retail executives (99%) say their companies are taking (or planning to take) action to prepare for the surge in online consumer traffic during the holiday season, most commonly by preparing their website infrastructures (45%), offering additional fulfillment options (44%), and working with tech vendors to have excess infrastructure capacity ready (41%). 

• Finally, more than 9 in 10 retail executives (92%) are confident that their website infrastructures are capable of scaling to handle traffic spikes this holiday season.

Supply Chain Complications Become Retailers’ Biggest Fears

Despite the sense of optimism,  nearly all retail executives (94%) say COVID-19 related concerns are still keeping them up at night. Specifically, supply chain issues (46%) and being able to fulfill orders on-time (45%). 

Retail executives universally agree (95%) that, in this day and age, online retailers need an efficient supply chain to provide products to customers in a timely manner. To prepare for any unexpected changes in their supply chain this holiday season, retail executives say their businesses have taken the following steps:

Still, the majority of retail executives are concerned about the viability of their companies’ supply chains for this holiday season (78%). More than one in three retail executives (36%) say they are kept up at night worrying about managing inventory effectively—in particular, more than half are concerned the pandemic has made inventory management too difficult (61%), and that they may run out of inventory (53%) this holiday season.

Creating Multiple Paths to Deliver Gifts in Time 

December 15 has long been labeled as the “drop-dead date” to order products online and get them in time for Christmas. However, the drastic increase in online shopping this year has caused many retailers to rethink their plans for a more robust delivery strategy. 

When thinking about this holiday season, most retail executives expect there will be clear changes with both pick-ups and deliveries. When thinking about the top three emerging ways of purchasing goods and services, the majority of retail executives say consumers will most commonly use:

Safety is another clear and critical theme this year. For retailers, preparing new contact-less options for product pickup (60%) is one of the top actions that executives are considering and implementing this holiday season. In fact, retail executives anticipate the use of curbside pick-up will rise by 37%, on average, compared to the holidays last year. Similarly, compared to last year, retail executives expect growth of 39%, on average, in order-online to pick-up in-store services this holiday season.

At Google Cloud, we knew it was going to be a holiday season unlike any other. In a traditional year, we work with our retail customers to plan for the season, from preparing for unexpected online website traffic, to monitoring real-time holiday promotion performance, to ensuring supply chains can scale with massive orders. But those plans became the norm at the start of the pandemic.  To learn more about how Google helps retailers get ready for the holiday season with our Black Friday Cyber Monday  white glove services, check out this blog.

We prepared for a 2020 holiday season that would be predominantly online, and helped ease our customers' worries around many of the concerns outlined in the research above. Visit here to download the full 2020 Google Cloud Retail Holiday Reality Report with data breakdowns for the United States, United Kingdom, Germany, France, Brazil, Indonesia and India.