Supply chain disruptions and consumers anxious to receive holiday gifts in time defined a 2021 retail peak season that saw spending pulled forward followed by lackluster Black Friday and Cyber Monday sales worldwide. But decreased spending in what is traditionally the year’s busiest retail week was an anomaly when looking at the wider holiday context. Retail spending increased 13.6% year over year.
There is plenty of information to take away from this year’s peak season, especially involving waning patience for pandemic-related disruptions and how consumers researched and purchased products this year. As the year comes to an end, insight into this year’s peak season can help inform retail marketers’ 2022 personalization strategy and get some brands thinking early about next year’s busiest retail season.
Supply Chain Uncertainty Leaves its Mark
Product shortages caused consumers to plan and purchase their holiday gifts in advance, which incuced record November retail sales in the United States. U.S. retail spending was up 13.6% year over year for the first 28 days of the month, with much of that shopping done in the first three weeks. Unfortunately, even with advanced planning, 63% of U.S. holiday shoppers experienced out of stock items and more than half of U.K. adults were concerned with product shortages in Q4.
Some sectors were hit harder than others. As expected, electronics sales were down 30% on Black Friday and 23% on Cyber Monday, largely due to empty shelves and low inventory available for online shoppers. Toys and home goods experienced less dramatic shifts, but lower than expected sales are still an indication of inventory concerns.
Supply chain issues had an interesting effect on consumer behaviors. With only 13% of shoppers saying they were willing to wait for out-of-stock items, many brands lost out to competitors while others saw a flood of opportunistic holiday shoppers. Either way, retention, loyalty, and win-back campaigns will be top of mind for retail marketers after 70% of consumers switched retailers or brands when confronted with empty shelves.
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Prices Rise and Discounts Fall
Because retailers could not rely on full product inventory in Q4, many brands eschewed the traditionally deep discounts that lure holiday shoppers. The average Black Friday discount decreased two percent year over year and more than half of shoppers said they experienced higher prices in 2021 than they did in 2020.
Inflation also left its mark on consumer goods, with the average selling price for consumer goods up 18% in the United States and 10% in the United Kingdom. The forces of inflation and full-priced shopping combined to drive an increase in retailers’ average order value. Even though shoppers purchased roughly the same amount of goods as they did over Cyber week in 2020, average order value grew by roughly 8.7% in both the U.S. and U.K.
The increased cost of goods means that higher-income households were responsible for most of the growth in this year’s holiday spending. High-income household spending increased by 15% over the holiday season while middle-income spending remained stagnant and low-income families decreased spending by 22% year-over-year.
The way shoppers paid for gifts also changed given the general trends of the season. Credit card usage was down three percent year over year while installment plans such as Buy Now Pay Later increased by 30%, which suggests that BNPL has now fully established itself.
Brands have a real opportunity to anchor many of their retail campaigns with BNPL options that could help many consumers pay for retail items that may be slightly less affordable in 2022. Based on a consumer’s shopping experience or abandoned cart, personalized email and mobile campaigns that break down the cost of items in a BNPL framework could help sway more shoppers to complete their purchase.
Channels new and old drive holiday growth
If 2020 was a holiday season dominated by eCommerce, consumers in 2021 proved more diverse in their shopping options. Mobile was the big winner this year, with 62% of all retail web traffic coming from mobile devices on Black Friday. On top of that, 44% of digital transactions were completed on mobile devices over Black Friday in 2021, which is a 10.4% increase over 2020. Retailers can take advantage of the trend by influencing consumers to download and shop via mobile app for even more targeted marketing and digital communications.
People were also more willing to shop in person. While foot traffic has not recovered to pre-pandemic levels, it was up 47.5% over 2020. Shoppers are signaling their willingness to leave the house and get back to the experience that physical stores provide.
Yet eCommerce has firmly taken hold of the global imagination, and it started before the pandemic began. In 2015, retail consumers said that 51% of their holiday budget was spent online. That number jumped to 59% by 2019, while the pandemic caused another increase to 64% in 2020 and 62% in 2022. What’s now clear is that most consumers prefer to do their holiday shop online but everyone has a different approach.
Plenty of consumers still enjoy walking into a store, but could do their research online beforehand. And eCommerce shoppers are clearly using multiple channels and devices to research and complete purchases. It’s marketing’s responsibility to create persuasive, personalized touch points every step of the way.
Data personalization makes a big world much smaller
The world is entering the true omnichannel future. There are a daunting number of options open to retail shoppers that crave convenience. But the more consumers shop online, the more all those interactions are measurable, collectible, and usable. Digital marketers need to translate the ever increasing amount of data they have on consumers into stunningly visual personalization that drives sales.
The world is preparing for what is hopefully the last year of our “new normal.” Consumers are losing patience with supply-chain issues, closed stores, and shopping experiences that aren’t tailored to their unique needs. It’s time for marketers to pull all that customer information, no matter where it’s collected, into email and mobile marketing that builds loyal relationships between brand and customer.
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