Holiday 2021: Industry Thought Leaders Share Top Predictions
Are you curious to know what this holiday shopping season will look like? We were too—so we reached out to top retail executives, analysts and industry thought leaders to gather their predictions for what’s in store for quarter four.
Here’s what we learned:
- Consumers are spending more than last year—and the year before that. In fact, holiday retail sales in the United States are forecasted to reach up to $859 billion.
- Shoppers are starting early. Although retailers have been rolling out deals earlier than Black Friday in recent years past, we are seeing consumers increasingly starting their holiday shopping in October with some beginning as early as September.
- Shortages and delays are a top concern among retailers and consumers. Loyal customers are prepared to switch brands or shop elsewhere if their favorite retailers don’t have what they need.
- Apparel will see big gains this year. The return of holiday parties and in-office work has consumers refocusing on fashion.
- Shoppers are returning to the store. Although e-commerce will remain a strong channel, more consumers are seeking out physical shopping experiences than they were last year.
- Social commerce will prove its power. Facebook, Instagram and TikTok will be key players as Gen Z’ers flock to non-traditional shopping channels.
Read more from our network of retail industry thought leaders:
Robert Baldwin, Senior Vice President/General Manager at TABS Analytics, Blacksmith Applications
Katherine Cullen, Sr. Dir of Industry and Consumer Insights at The National Retail Federation
Courtney Hawkins, Vice President of Retail at TheRealReal
Tom Litchford, Head of Worldwide Business Development, Retail at Amazon Web Services
Siobhan Lonergan, Chief Brand Officer of Shapermint
Jim Marcum, Chief Executive Officer of David’s Bridal
Emily Pfeiffer, Senior Analyst for Commerce Technology at Forrester
Bill Ready, President of Commerce at Google
Taylor Schreiner, Director of Digital Insights at Adobe
Mike Webster, Senior Vice President and General Manager at Oracle Retail
Consumers are spending more than last year
This year, we are expecting that retail sales in November and December will grow somewhere between 8.5 and 10.5%, which is a pretty historic high.
Last year, retail sales grew a phenomenal 8.2% over 2019. But we really haven’t seen this type of growth over those months, at least not in the last decade. We are expecting that a lot of that is being fueled by some pent-up demand, the current state of consumers, their interest in holidays, and this idea that we’re in a different place when it comes to the pandemic.
Shoppers are starting early
The search for deals will begin early. After the year we had in 2020, along with the fact that there are continuing supply chain disruptions, people are going to be beginning their holiday shopping journeys earlier and earlier. And not only will holiday shopping begin earlier, but the search for deals is also going to begin early, too.
Consumers will continue to start holiday shopping earlier than usual. We’ve seen businesses and customers rolling out holiday promotions as early as October.
Retailers tell us they’re starting promotions earlier. But that’s also been happening for years. The evolution of the big shopping weekend was Black Friday, then extending through the weekend, and then into Cyber Monday. But for years now, peak holiday offers begin much earlier in the month.
We’ll see how much it helps this year. We know consumers expect to spend the same or more than last year. But it’s a really interesting lesson that we all had to learn together: that consumers don’t magically have more dollars to spend just because they start spending them early.
Supply chain delays, ongoing carrier issues, and expectations of late deliveries or out of stocks have driven a record number of U.S. consumers to jump the gun on holiday shopping.
Shortages and delays are a top concern among retailers and consumers
It’s going to be a unique year. So what we’re seeing right now is e-commerce demand being extremely high. Consumers want to shop online and they are expecting deals online. There’s a huge amount of demand in the system for e-commerce.
We are also seeing a holiday season that is going to be defined by shortages. It’s going to be defined by the inability to get certain goods, the inability to get them at the time that consumers want them, and the inability to get them to the place they need to go on time. Or even if all those factors aren’t at play, there are going to be items that are more expensive than they were even a year ago. And that is dramatically different than anything we’ve seen.
There is no doubt that every retailer is being affected significantly by the supply chain—and in some cases even by labor and staffing. But I think it’s going to be all about who has the product availability. Economically, I think the consumer is there to buy the product so, again, retailers that have the availability are going to win.
While the pandemic has exacerbated product availability and fulfillment issues, the roots of the supply chain struggle run deep.
To prepare for the challenges beyond the holidays, retailers have put building intelligent supply chains at the top of their priority lists because small improvements can deliver significant results to the business and the end customer. Intelligent supply chains enable retailers to transform demand planning, build next-gen warehouse operations, and gain end-to-end visibility across their entire supply chain.
Many retailers have planned to bring in extra inventory to stay ahead of demand. We have all seen the images of container ships backlogged at major ports. There’s a lot of pressure for retailers to keep up with this year’s e-commerce demand. After all, retailers and manufacturers weren’t expecting e-commerce volumes like this for another few years.
But remember, there’s a bigger story here—the retailer itself can only prep so much. We need the entire supply chain to work together. From corrugated suppliers to delivery drivers—it’s going to be a real team effort to get products in the hands of consumers this holiday season. We see that supply chain partners are working their hardest to meet this year’s considerable demand. The United States Postal Service is investing in more package sorters and additional facilities. UPS, FedEx and DHL are hiring thousands of seasonal employees to help handle the massive volumes expected from October through January 2022.
Consumers are worried the supply chain woes will ruin their holidays. While it’s anyone’s guess how this will all go, for retailers, it is essential that they have clear visibility into their inventory globally to ensure that they have the flexibility to get customers the product they want – no matter where they are coming from.
Apparel will see big gains this year
As people go back to work, especially in this season, they are actually starting to think about holiday parties for the first time. So we are starting to see things pick up again and across the board in terms of our product range.
Shoppers are returning to the store
Online shopping has undoubtedly seen significant increases, which will probably level off at around 20% of retail sales in the next year or two.
Even with the big revenue jump in e-commerce, many consumers are missing the social aspects of shopping. Research consistently points out that consumers, particularly Gen Z and millennials, are looking forward to having the option of going back to a store for a social experience.
We are seeing that people are very interested in the store experience this year. We know that the holidays in particular, people like to touch, feel, and see those gifts in person. So, we do expect, particularly around Thanksgiving weekend, that people will embrace the tradition of in-store shopping.
The retail holiday season will be met with improved customer optimism and obstacles to hurdle for the retailer. With consumer travel increasing, vaccinations expanding and excitement for the season, store traffic will be a record high.
Retailers will have to overcome supply chain challenges as well as staffing shortages by being prepared operationally. Securing an amazing experience that does not disappoint customers will not only pay this holiday season but also build loyalty for the future.
Social commerce will prove its power
With the exponential adoption of online shopping during the pandemic, retailers began viewing their digital properties as their “flagship” store.
We’re seeing retailers create more immersive digital experiences this holiday season through store virtualizations, Livestream commerce, and 3D product visualization using augmented reality. We also expect to see more machine learning-based personalization to not only help customers find the right items but also reduce post-holiday returns
People will continue to shop from new formats. We’ve seen a 60% increase in Google image searches for and a remarkable 70% of customers buy a brand after seeing it on YouTube.
So, a tip for merchants around that, using rich imagery and video is a great way to engage with customers, tell your brand story, and help customers get more of that feel for who they’re buying from in the digital environment.