The holiday shopping season in 2020 was unlike any other, and retailers have reason to be optimistic about this year’s shopping season. KPMG predicts a historic 7% growth in holiday sales in 2021 and many retail executives are anticipating a 35% increase in online sales over last year. However, there have been a lot of fluctuations in consumer behavior in the last year, and recent survey data can give insight on how retailers can plan for success in this holiday season’s landscape.
SMG surveyed more than 6,500 consumers about their anticipated holiday shopping plans, comparing the responses to data we collected last year. Here are 3 takeaways that emerged:
1) Financial situations have improved, but budgets remain flat
Over 80% of consumers indicate that, financially, they are doing as well as or better than last year. As a likely result, marginal improvements can be seen in year-over-year spending plans, with 22% of consumers planning for an increased holiday budget and only 14% planning to spend less. However, most consumers still say they’ll be spending less than $1,000 total this season.
The spending that does happen will be driven by value. The highest scoring motivator for where customers will shop is “value for the money,” with 33% of customers indicating it as their most important factor. It’s important to consider while there will be a little more spending out there this season, customers will be selective and driven by value.
2) Consumers are starting holiday shopping earlier
It’s an old chestnut that holiday shopping starts earlier every year, but this year it’s true. Forty-two percent of consumers indicate they’ll shop earlier than they did last year, and 63% indicate they’ll do the bulk of their shopping before Black Friday.
With most retailers traditionally starting their marketing push around Black Friday and running through Christmas, data indicates those who do so might be fighting for scraps. Draw on loyalty programs and focused digital marketing early to reach your customers and get on their holiday shopping radar sooner rather than later.
3) In-store shopping will bounce back
Online shopping saw a big bump last year and it’s here to stay, but in-store shopping is making a comeback. Our data shows an 11% increase over last season for a total of 36% of consumers reporting they’ll do most of their shopping in-person this year. In fact, there’s an 8–12% increase for in-store shopping across all income brackets, even if the overall number of online shoppers is still greater.
Concern about COVID-19 is not the driving factor in moving shopping online in 2021. Although 32% of customers still indicate a concern for contracting COVID-19 while holiday shopping, the driving motivator for deciding where to shop remains the ease + convenience of online shopping.
Although stores will need to accommodate more in-store shoppers, persistently high numbers of online shopping orders will necessitate a balance in staffing and expectations, including planning for an increase in curbside pickup and BOPIS (Buy Online, Pickup In-Store) orders. Plan accordingly to be sure you deliver a high-quality, high-value customer experience for every channel.
Plan now and act early for a happy holiday shopping season
There’s a little more money on the table for holiday shopping this year, but customers will be shopping early—leaving their homes a little more in search of value, but still largely operating online. Be prepared for an unexpectedly early return of in-store holiday traffic, but don’t forget to deliver a top-notch online shopping experience as well. Communication is key—clearly share fulfillment options, delivery expectations, and delivery timelines for key dates.
For tips on how to manage customer and employee experiences when confronted with rapidly evolving circumstances, download our Retail XM Playbook: https://bit.ly/2Oo2jN8
Kurt Cederman | Director, Research