Despite the rocky road to recovery, confidence in the post-pandemic economic recovery is strong, and consumers are eager to celebrate the holidays in style this coming season. Consumer confidence is rising in tandem with rising vaccination rates which are making it safe for consumers to safely shop, dine, and travel at pre-pandemic levels.
Projections in holiday spending support this, as well. The National Retail Federation (NRF) is forecasting a staggering $843.4 – $859 billion in holiday sales making 2021 a record breaking holiday shopping season. Deloitte is forecasting that “across channels, retailers should expect a strong holiday season as consumer spending levels are projected to remain high.”
This holiday season, the theme is “shop smart, shop early” and both customers and retailers are onboard.
Omnichannel is king
This increase can be attributed to consumer desire to indulge in pre-pandemic holiday shopping traditions, luxury not available to them last year. Despite their desire to return to in-store shopping, consumers are not abandoning the omnichannel shopping and fulfilment methods they depended on during the pandemic. Deloitte’s holiday shopping poll indicates that customers anticipate shopping whichever channels will make holiday gift buying convenient, simplify their buying decisions, and offer the best deals and selections.
The convenience and variety of options that improved omnichannel shopping have given consumers more control over their shopping experience, marking this holiday season as the beginning of the new normal; one where omnichannel omnipresence is a defining consumer behaviour that retailers must accommodate.
According to a report published by McKinsey & Company, omnichannel remains dominant with “60 to 70 percent of consumers across categories shopping/researching both in store and online and social media influencing up to 40 percent of consumers in categories like jewelry, accessories, and fitness”. Social media has become a persuasive tool for consumers in the decision making process, but also in facilitating their purchases with shoppable media. Social media influencers are driving demand for products by demonstrating to their followers the value and use of the products they are promoting.
Retailers are quickly realising the significance of social media influencers in the new buying behaviors their customers are adopting and moving quickly to secure influencer sponsorships of their own. Forward thinking retailers are finding creative ways to convert their own store associates into influencers by equipping them with the tools and empowerment to conduct streaming demonstrations and reach online customers through social media and other unique online shopping channels. With virtual shopping and clienteling tools available, sales associates can showcase the products they have on hand and help customers find items similar to those that have been waylaid by the supply chain breakdowns continuing to reverberate globally.
Supply Chain is Top of Mind
Retailers and customers alike are trying to mitigate the challenges that these supply chain disruptions present. Customers are shopping early and, reminiscent of ‘toilet paper-gate’ of the early pandemic, stockpiling gift items to avoid inventory shortages and holiday rushes closer to the holiday season. Retail executives shared the concerns of their customers and ordered their holiday inventory earlier than ever with 43% placing their holiday inventory orders in or before March to ensure they had product on hand for this record holiday shopping year.
Omnichannel research has become a critical part of the in store shopping experience for customers as supply chain issues continue to plague the retail industry, making everything from white label home goods to popular children’s toys scarce at a time when those products move quickly from store shelves and warehouses. Out of stock alerts have increased a staggering 172% over the pre-pandemic period, and Adobe, Inc projects that this level of scarcity is going to remain and possibly increase in certain categories.
A majority of omnichannel customers continue to prefer traditional delivery methods which, when paired with the rush to purchase gifts before they go, is adding an additional burden to the already stretched-thin shipping providers resulting in delays that could run past Christmas morning.
In the same way that virtual selling and clienteling tools like Salesfloor’s platform are helping retailers to leverage influencer marketing and social shopping, they are also helping them to navigate stock out nightmares. Sales associates can showcase the products they have on hand and help customers find items similar to those that have been waylaid by the supply chain breakdowns continuing to reverberate globally. Online customers can view products on hand in local stores, select, and even purchase their items or have them held at the counter until they can come to the store.
Higher Price Points
The laws of supply and demand will be illustrated for holiday shoppers this year, since the most popular gift-giving categories like electronics, toys, and apparel are the ones hardest hit by supply chain challenges. In a survey conducted by Credit Karma, consumers surveyed are experiencing significantly more financial stress this year over previous holiday seasons, and cite inflation as the primary driver of that stress.
The same survey indicates that, despite financial instability, consumers intend to spend the same amount or slightly less than they did last season, even if that spend means accruing debt to do so. Nearly 25% of those who responded say they expect to go into debt over the holiday season purchasing gifts for family, children, and other loved ones while celebrating this particularly poignant holiday season.
Some retailers have added a Buy Now Pay Later (BNPL) option to encourage customers to make purchases and pay in interest free installments. Software Advice reports that 91% of 700 retailers surveyed are either evaluating this option or have rolled it out in time for holiday shopping.
BNPL payment options have benefits for retailers as well as customers eager to secure that perfect gift. It presents an opportunity to increase revenues, attract new customers, and will increase the average order sizes of each transaction.
Payment options like BNPL should be thoroughly communicated to customers in whichever channel they are using to shop. Messaging apps and communication with local sales associates who can guide them through their payment options will minimise the risk of abandoned carts and ensure that both retailers and customers walk away from each transaction happy with the outcome.
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