It’s almost mid December, and we’ve entered gifting season. While many consumers made their purchases early, there is still time to buy gifts. This week, we are joined by VMLY&R COMMERCE’ s Brian Owens, Senior Vice President of Commerce Strategy and Charlie Wade, EVP Business Development (N.A.), Head of D2C to talk more about what these last few weeks of the year will look like, and what we will see continuing into 2022.
MM: Welcome, Brian and Charlie! We’re very excited to hear some of your insights on the 2021 holidays. First things first, what trends have you been seeing thus far this year?
CW: Thanks so much for having us! Despite the slightly soft ‘Turkey Weekend’ this year, consumers will keep spending. The National Retail Federation (NRF) estimates retail sales across November and December will see a 8.5 percent to 10.5 percent year-over-year increase, which could reach a record $859 billion. The intent is there – so brands must have their consumer experience finely tuned to avoid missing out.
BO: Yes, we’re seeing that about 28 percent of people expect to spend more on gifts in 2021 than they did in 2020. However, I also think that they are more inclined to shop at smaller retailers and approach their shopping with their community in mind. This holiday season is one where we will start to see Gen Z become even more of a force in the economy. They will be the generation who leads in making purpose-driven purchases.
MM: We’ve definitely been hearing about these more local and purpose driven purchases preferences too. Tell me more about your observation that more people will be shopping this holiday season, what do you think is driving it and what impact will it have?
BO: Well, the obvious reason is because people are becoming more comfortable with shopping and celebrating in person again as vaccines continue to roll out and the economy starts to recover. So far, we’re seeing 21 percent of consumers looking to use pick-up this year and 33 percent plan to host or attend more holiday events with people outside of their home than they did last year.
CW: Yes, and generally, the retail calendar has moved earlier. It had already seen the discount season expand (sometimes referred to as ‘Gray Friday’) with retailers launching deals way before Thanksgiving. This is especially true of toys, with Target releasing its top toy list in August, fully two months earlier than it did in 2020.
However, discounts have also been lower. Adobe Digital Insights found that on average, electronics were -12 percent off RRP on Cyber Monday compared with -27 percent in 2020. Apparel was -18 percent versus -20 percent the year before, and appliances -8 percent versus 20 percent in 2020. This might well have been a factor in why overall Black Friday and Cyber Monday sales were lower than anticipated.
MM: Tons of reasons for brands to be on their best game for this holiday season. How are shifts in consumer preferences impacting the holiday season?
CW: Shoppers are spending time across channels. Adobe anticipates digital sales from November 1st to December 31st will hit $207 billion, record gains of +10 percent. Online continues to dominate research rather than in-store browsing, with Coresight Research claiming that 56 percent of shoppers will discover new products online. It is truly a connected commerce journey and retailers must make theirs seamless and available.
What’s more, managing supply chains and forecasting will become increasingly important over the coming years – as will the customer experience when they do reach an OOS page. (Where do you refer them to in order to avoid losing the customer?)
MM: I see, and how have we seen brands and retailers respond in how they try to connect with their consumers?
BO: Well, retailers are bringing back experiential retail and thinking of different ways to connect with their audiences this year. 34 percent of shoppers expect that they will spend more on groceries this holiday season. Candy brands have a great opportunity to succeed outside of the traditional retail environment and drive demand through social commerce. Health-focused brands too will come to the forefront when shoppers choose where to put their money.
Another area to note is differentiation. First, brands and retailers are featuring more social causes on their websites and channels, corresponding with the shift in shopper sentiment. Second, there’s a lot more competition between brands, whether through trying to out-discount each other, or through the strength of their digital presence and seamlessness of their shopping experiences. What’s more, we could also very well see retailers celebrating “unofficial” holidays like Friendsgiving, Singles Day, etc. to differentiate themselves from other retailers.
MM: We’ve been hearing about these unofficial holidays too. Really looking forward to seeing how they evolve with eCommerce as we approach 2022. Thank you so much for your time, Brian. Happy Holidays!
BO: Same to you.
CW: Thank you.