Unpacking Holiday Trends: What Retailers Need to Know

Despite economic challenges, U.S. retail sales during the 2020 holiday season reached $789.4 billion, according to the National Retail Federation. E-commerce accounted for a bigger slice of that pie than ever before, with online and non-store sales totaling $206 billion, up nearly 24% from 2019.

So, will that upward trend continue, despite retail labor shortages, supply chain woes, shipping delays, and a persistent pandemic? The short answer is yes.

Forecasts from three different firms predict holiday sales will grow by at least 8% compared to last year, with sales in the U.S. topping $800 billion. This surge is fueled, in part, by shoppers’ eagerness to spend on clothes, jewelry, and electronics. Record Halloween-related sales also bode well for the holiday season.

Although the forecast is relatively rosy, retailers are competing for every dollar. Many are taking a more strategic approach to capitalize on pent-up shopping energy than they did last year. Let’s take a closer look at what we can expect from the 2021 holiday season, including best practices for maximizing sales. 

Retailers will continue to connect online and offline experiences

With digital shopping experiences becoming more immersive, faster, and easier, traditional brick-and-mortar retailers will look to provide incentives for shoppers to visit physical stores. This includes hosting events, including one-day sales and free holiday activities for kids, and using festive decorations and interactive displays to transform stores into destinations. 

That said, retailers realize the cosmic size of the e-commerce opportunity. More than 1 in $4 spent on retail purchases between November and December 2020 came from online orders, up 45% from 2019. Already, brick-and-mortar stores are using strategic placement of digital signage, QR codes, and hashtags to promote online offerings and connect online and offline channels—something not every retailer had mastered last season. 

The pandemic accelerated the maturation of visual experiences. As a result, e-commerce platforms will use festive designs and engaging images and video to create sites that rival storefronts. Retailers will also continue to use BOPIS, which, according to NRF research, improved the customer experience for 70% of surveyed consumers by increasing convenience.  

Supply chain worries add a sense of urgency

Last year gave us a glimpse into the impact of going into a holiday predominantly online with severely restricted inventory while experiencing shipping challenges. The stories of gifts arriving late, or not at all, were far too common. With supply chain concerns well documented, some shoppers may prioritize in-person shopping so they can leave with the item in-hand, rather than worrying that a gift won’t arrive in time. To compete, online retailers will encourage consumers to shop early and, when relevant, even proactively suggest shoppers visit a physical store. They will also need to be sure to provide accurate shipping estimates or risk damaging customer relationships.

Like last year, sales aimed at competing with traditional “Black Friday” and “Cyber Monday” deals have already begun cropping up. Amazon launched Epic Daily Deals on October 4, with a live video explaining that Amazon is counting down the days until December. While conventional one-day-only shopping holidays will still drive conversions, more retailers will opt for similar, rolling promotions. 

Mobile as a means to something new

Last year, mobile commerce accounted for 39% of e-commerce sales, according to Adobe. This year, retailers should be prepared for mobile, including social commerce, to comprise an even greater percentage of sales.

Certainly, people value the convenience of checking a gift off their list while waiting in line at the grocery store. But retailers can unlock the most value from mobile by offering exclusive deals and guarantees — with perhaps the most important being the guarantee of item availability. Other tactics such as offering free shipping, special promo codes, or other incentives for joining a mailing or texting list or downloading an app are also important this holiday season. In addition, retailers can help drive greater mobile adoption, customer interactions, and even sales by offering visualization and configurator tools that use technologies such as 3D modeling, AI, and Augmented Reality to let customers customize products and better visualize how items will look in their homes.

It has been a challenging 18 months, to put it mildly. But this year, greater knowledge about customer behaviors and preferences – coupled with shipping and supply-chain limitations – is inspiring retailers to take a strategic approach to maximize the 2021 peak season. Expect a banner year for e-commerce and the continued marriage of physical and online retail to create truly memorable, convenient, and joyful experiences for holiday shoppers.

Danny Turner is Global SVP of Creative Programming at Mood Media.

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