Why Retailers Need to Get Proactive – And Digital – Ahead of the Holidays

Product PayPal Innovation Buy Now, Pay Later Research and Insights

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While crowded malls and long lines may not be in the cards this year, the holiday season is still a critical time for retailers.

Despite this, new research commissioned by PayPal and conducted by Netfluential reveals that many U.S. retailers are taking a reactive, wait-and-see approach to the holidays. Still, other merchants are being proactive by finding innovative, tech-enabled ways to reach consumers in the new environment.

'Tis the season to be proactive.

Among the 1,000 small and medium-sized retailers surveyed in sectors ranging from home goods and electronics to fashion and cosmetics, only a small number (39 percent) are proactively preparing their businesses for the holidays. One in 5 businesses claim their future is dependent on this year’s holiday results, but over half (57 percent) of retailers hadn’t started preparations at the time the survey was conducted. That includes adjusting staffing levels: 70 percent say they’re not planning to hire additional holiday help or bring back employees let go due to COVID-related cutbacks.

One possible reason for this lack of preparation is caution and uncertainty about shoppers’ willingness to spend as much as they did in previous holiday seasons. With more than 1 in 3 merchants expecting holiday sales to be lower than last year, the research shows that some merchants are implementing key strategies to boost revenue, including offering financing like PayPal’s “buy now, pay later” options such as Pay in 4, which is part of PayPal’s suite of pay later solutions and available in Q4. Headed into the holiday shopping season, flexible payment offerings like these help retailers shift from reactive mode to more strategic planning. Considering the current economic and health uncertainties, retailers must continue to adapt to drive sales and support consumers, who often depend on retailers to help make the holidays special.

Flexible payments make the season bright.

Merchants are also embracing additional methods of digital sales outside of their own websites. Thirty-nine percent of merchants are planning to sell products on digital marketplaces, and 31 percent will make products available for purchase through social media apps. These adjustments can help merchants replace diminished foot traffic with online traffic.

Holly, jolly—and safe.

The vast majority (81 percent) of retailers are taking extra precautions to keep shoppers safe. First, retailers are finding ways to limit physical contact and help customers practice social distancing. Nearly half (46 percent) are planning to offer curbside pick-up, while about the same amount will make masks mandatory and implement physical distancing rules. Thirty-four percent also say they will offer hand sanitizer in-store.

Digital solutions are also making it easier for customers to shop safely and more flexibly. More than a third (34 percent) of retailers who sell in brick-and-mortar stores are implementing cashless payment options. In addition, among fashion retailers, 39 percent plan to offer virtual alternatives to fitting rooms, including online fit or sizing tools, virtual showrooms and virtual stylists.

This holiday season, merchants can take a proactive approach to sales by embracing digital payment options, flexible payments, and more. Learn more about PayPal’s newest pay later option, Pay in 4, ahead of the holiday season, and for more on PayPal's research findings, view the below infographics.

1 "An online study commissioned by PayPal and conducted by Netfluential in August 2020 involving 1000 U.S. PayPal SMB merchants selling products directly to consumers through a website or e-commerce platform. The sample is made up of merchants in different verticals, 200 in fashion, 200 in cosmetics and 600 across home-goods, furniture, garden electronics and sport."

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