Predicting the Holiday Season

Predicting the Holiday Season.

There are two ‘prediction seasons’ we look forward to at RetailWit HQ every year, the yearly predictions and the holiday forecast. We are currently knee deep in Holiday forecast season, and unfortunately it’s going to be our second COVID Holiday season, so it will be another weird one. Today, we are diving deep into holiday forecasts.

Not sure if you have noticed, but forecasting the upcoming holiday season is a pretty hot topic. The RetailWit database already has 1,500 articles on what the holiday season will hold. If you Google ‘2021 Holiday Forecast’, you get 75.7M results.

So we looked to some of our favorite ‘Oracles of Retail’ to see what they are predicting.

 “The retailers that come out ahead this holiday season will proactively plan for supply chain headwinds, keeping marketing nimble and finding new opportunities to delight customers both online and in stores.” 
-Darrell Rigby, partner, Bain & Company’s Retail practice.

First, a quick look at what the trends have been over the years.

Predictions for the 2021 Holiday Season:

Deloitte predicts Holiday retail sales to increase 7-9%
MasterCard, not afraid of going to a decimal point, predicts the U.S. Holiday retail sales to grow 7.4%
AlixPartners, a bit more bold in their predication, predicts a double-digit Increase Holiday gains in the range of 10-13%
Bain is right in line with a forecast of 7% Growth In U.S. retail sales this Holiday
On the other end of the conservative scale eMarketer predicts total Holiday sales will rise 2.7%
Following suit on the lower end NPD predicts holiday season growth between 3%-5%

2021 Holiday Trends

Additionally, when forecasting the numbers there are a few important Holiday Trends to watch this year as well as some tailwinds and headwinds to consider.

Earlier Shopping

Historically the largest driver has been the ever-earlier deals from retailers; the pre pre pre black Friday deals. This year, though, there are indications that the depth of discounts will not reach previous year’s levels. According to RetailMeNot’s holiday survey 66 percent of consumers prefer to complete all their holiday shopping as early as possible and 30 percent are starting even earlier than they did last year. I, obviously, wasn’t part of this survey…….

In-store is back, but online isn’t going anywhere

Last year, COVID drove shopping online and the indications this year are consumers are itching to return to stores, but the vast majority still plan to split their holiday shopping about 50/50 between in-store and online shopping. Retailers will need to think and act omni-channel to be successful.

Planned Average Spend Is Up From Last Year

According to RetailMeNot consumers plan to spend 15% more than they did last year. $886 on average, up from $766 in 2020 and $738 in 2019. Many research studies show that there is pent up consumer demand and increased savings that consumers intend on spending this holiday season.

Free shipping (and returns) is a must! On time delivery is a concern

Again, according to the RetailMeNot survey, 46% of shoppers report they are more likely to purchase from a retail if they offer free shipping Though, 41% report they are nervous that packages will not arrive on time.

Shoppers Will Embrace Mobile Commerce

According to Business Insider, mobile commerce (m-commerce) is predicted to account for 36% of all eCommerce sales this year. And currently, mobile apps are converting customers 157% more often than mobile website counterparts.

And lastly, customer experience is critical as shoppers rely on family and friends first when it come to deciding where and what to buy

While shoppers want to hear from brands about discounts and pricing, the products that make their shopping list come from a source closer to home; family and friends. Recommendations from people they know are more than twice as likely to influence their purchase decisions as recommendations from experts.

Tailwinds and Headwinds to the 2021 Holiday Season

Tailwinds

Shoppers will be traveling again, dining out, entertaining, and going to the store
Pent up consumer demand
Relatively low unemployment
Increased savings
Government stimulus

Headwinds

Consumer hesitations, frustration & disappointment
Retailer hiring challenges
Supply chain complications
Hurricane Ida could be a spoiler
High inflation rates

Last Words: Thanks to Tom Fishburne for the perfect cartoon to summarize this holiday season, it is a bit of a crap shoot. While there is significant potential for a record year for holiday demand, with the supply and labor challenges there may not be enough product available to meet that demand.

We would love to hear your thoughts in the comments below.

Are you a fellow Retail Nerd looking to dive in deeper? Here are some of the articles referenced.