It’s another make-or-break time for retail. Last year’s holiday season was a rollercoaster, as most brands and retailers were busy trying to navigate changing product demands, supply chain disruptions, and shipping delays among other surprises. This year with economies opened there’s renewed vigor to splurge across multiple channels.
A forecast by Mastercard SpendingPulse predicted holiday retail sales would rise 7.4% from a year earlier and an 11.1% increase based on the past two years, boosted by the rebound in in-store sales and the persistent consumer demand. Also, the forecast for the total US holiday retail sales in 2021 is expected to see a 2.7% rise to USD 1.093 trillion, while the season’s e-commerce sales will rise 11.3% to USD 206.88 billion. E-commerce will account for a record 18.9% of total holiday season retail sales.
That said, retailers would do well to prepare in anticipation of sudden demand spurts. For instance, Home Depot, one of the largest home improvement retailers in the US said it sold out of an early release of Halloween decor almost immediately in August itself. So what should players be cognizant of to have a relatively seamless and well-planned holiday season? Let’s find out:
Key challenges that lie ahead
According to Salesforce, US retailers will face an extra USD 223 billion in costs of goods sold this holiday season, which include year-over-year jumps in the costs of freight, manufacturing, and labor.
- In terms of manufacturing, supply chain challenges are bound to compel retailers to pay suppliers USD 12 billion more than they did last year during this time.
- Logistically speaking, US companies are estimated to spend USD 163 billion more on ocean freight, roughly tripling their costs from the same period, that is the second half of 2020.
- Labour-wise, it is anticipated that US brands and retailers will spend USD 47 billion in additional wages for store associates during the peak periods of November and December compared to last year.
After monitoring these and many more similar market developments, we’ve rounded up seven key holiday season predictions we believe will highly impact brand and retailer performance in 2021. Let’s dive in:
Top 7 predictions for the 2021 holiday season
1. It will be yet another extended shopping season
Brands and retailers started marketing holiday deals earlier than ever last year to both keep shoppers from flooding their stores at once and manage supply chain concerns and shipping delays. The advantage of this trend is that it allows brands to put some method to the general chaos created by such influx. For instance, this year, Amazon’s holiday deals come 11 days earlier than they did last year.
After last year’s product unavailability and delivery delays, shoppers are taking to the early holiday shopping routine without much convincing. Shopping is no longer restricted to the Cyber Week only. In fact, 40% of US shoppers will start their holiday shopping earlier this year than they did last year. 22% have already begun, with another 22% planning to get started before Black Friday. 2020 itself saw 39% of shoppers planning to complete most of their purchases by the end of October.
2. BOPIS and curbside pickup will continue to work as a win-win
According to NRF, BOPIS improved the customer experience for 70% of surveyed consumers by improving convenience. BOPIS is a win for customers because it is an assured way of getting their hands on their orders faster and save on delivery charges. For businesses, it saves on shipping costs and allows them to serve more customers at the same time. It’s no wonder why over half (51%) of the shoppers said they will use curbside pickup as often as they did last holiday season, while a third of them (33%) said they will use it more often.
An extended shopping period will also mean that as we get closer to December, shoppers will start taking advantage of quick fulfillment options like curbside and buy-online-pay-in-store. For online players, this 2021 holiday season prediction is bound to be a game-changer. Plus, with more ways to celebrate this year, shoppers are likely to be overwhelmed and take longer on their path to purchase. This will make BOPIS and similar non-traditional fulfillment methods critical for those last-minute purchase decisions. Here’s a quick look at how BOPIS is expected to fare as a flexible fulfillment option over the years.
3. Mobile commerce and feature-rich shopping apps will shine
This year, mobile-based sales are predicted to account for 72.9% of the total e-commerce sales. In fact, for this holiday season exclusively, 59% of shoppers said they prefer shopping online via mobile devices.
Players offering digital-first experiences are bound to inspire engagement. The average US user spent over 3 minutes in online-first apps. That’s 1.6x longer than shoppers spent in bricks-and-clicks apps.
Therefore, tracking engagement among your competitors and digital innovators will be imperative for traditional brick-and-mortar retailers eager to maintain or grow their mobile market share. Here’s a closer look at how digital-first players are reigning the charts, occupying 13 of the top 20 ranks for breakout shopping apps by growth in aggregate downloads.
4. Wants will dictate spends instead of needs
Last year, uncertainties around work and income saw many being more frugal with their holiday spends; only sticking to home and lockdown-based essentials. However, this year with restrictions further relaxed, shoppers are expected to travel more and splurge more on luxury products. Apparel, electronics, footwear, toys, and jewelry/accessories will be the top spending categories, both in-store and online according to a holiday report by Klarna.
Experiential categories are also expected to do well as many venture out for a vacation after almost one and a half years. This means that adventure, sporting goods, and baggage will be notable highlights compared to last year this time. Also, weddings and get-together parties will be spent on, more lavishly driving demand for party supplies, as shoppers are more than eager to play the perfect host. A survey by Microsoft perfectly depicts how the demand for discretionary categories is taking off.
5. Expectations for no-cost shipping and seamless returns reign high
Without access to significantly better deals than the rest of the year, it wouldn’t be just to reckon the holiday season as the most wonderful time of the year. One of the biggest expectations (94%) shoppers have this season is no-cost shipping and returns. This means that e-commerce players would do well to factor in free shipping as a part of their marketing strategy even if it means hiking the product price a bit or aggressively promoting subscriptions to keep their margins in place.
Next, the most exciting and disappointing part of the holiday routine – gifts. Another noteworthy 2021 holiday season prediction is that e-commerce players offering seamless returns will win more repeat customers in the long run. If you combine the two – that is zero-shipping costs with a minimum order value and free and easy returns, you are likely to convert more, inspire better customer satisfaction that will translate to loyalty. Going omnichannel with your returns policy – that is offering to return in-store, curbside, or doorstep pickup will only be a cherry on the holiday pie.
6. Well reviewed and budget items will be strong purchase signals
Often when shoppers find it difficult to pick between two or more product options with similar features, the best match in terms of customer reviews and pricing helps them make a choice. In fact, 71% of consumers say that reading reviews impacts what gifts they purchase for others, and 68% indicate this content impacts what they buy for themselves during the holidays.
Now while shoppers are eager to splurge this year more than 2020, their appetite for discounts and value for money deals, especially for those stocking stuffer gifts are going nowhere. It’s no surprise why almost half (48%) of shoppers say that discounting and price will have more influence on their holiday purchases this year as compared to last year. Online brands and retailers would therefore do well to keep monitoring the reviews that show up on their product pages, ensuring they are as authentic as possible. Also, integrating dynamic pricing will be key to deftly maneuvering your pricing strategies and discounts based on evolving market and consumer developments.
7. Self-checkout technologies and BNPL will enhance in-store experiences
With a decent number of shoppers steering their holiday shopping in-stores, brands and retailers would do well to whip up some exceptional in-store experiences. For instance, certain Whole Foods Market locations have now been equipped with Amazon’s Just Walk Out technology. This allows customers to skip the queue by scanning the QR code in the Whole Foods Market or Amazon app, hovering their palm using Amazon One, or inserting a credit or debit card linked to their Amazon account.
In 2021, this is bound to be a defining holiday season prediction, shoppers are eager to patronize retailers who offer flexible payment options like Buy Now Pay Later (BNPL). Big box retailers like Target and Walmart are witnessing enough traction in this aspect to add it to their holiday marketing strategies. As economies rebound, younger generations feel more confident about splurging this season. Even 2020 saw many direct-to-consumer startups leverage BNPL to drive customers towards higher-priced items and bundles during this peak period.
All in all, this holiday season is expected to be full of surprises, as emerging consumer patterns and market developments shape a peak rush like no other, both online and offline. For savvy brands and retailers eager to capture consumer attention and convert beyond this season, it’s critical to stay informed on the most recent shopping trend predictions and plan accordingly.
For over two decades, Netscribes has been supporting an array of international brands and retailers to up their holiday commerce strategy with timely consumer and market insights, and research-driven e-commerce content solutions. To know how we can help you maximize your holiday success this season, contact us today.