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QuickWit Weekly (10/4) – Predicting the Holiday Season and last week’s top retail news

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.

Historical trends

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.

Last Week's Top Retail News

GoPuff Plans to open a digital-first retail store

The store will use kiosks where shoppers can place orders, and the items will be picked and delivered to the shopper in the store. This micro-fulfillment model is now being brought straight to the shopper, will be interesting to see how popular this test store is and how quickly it might roll out.

Co-Founder and CEO of Whole Foods to retire

After spending four decades building and running Whole Foods, John Mackey is stepping down. Jason Buechel, current COO, will be taking over in September 2022. Maybe not a huge announcement, as John spent a lot of time with the company, but with the COO replacing him it is a bit telling on the future focus of the retailer…operations. 

Amazon Counterfeit Crimes Unit reaches settlement

Amazon went after Influencers who ran social media counterfeiting scheme, permanently banning them from Amazon’s store. The schemes used Instagram, TikTok and Facebook to direct customers to product listings in Amazon’s store that evaded counterfeit measures by appearing to be generic, non-infringing products, while the counterfeit items would, in fact, be shipped to customers. This has been a big focus for Amazon, and steps like this will help shoppers have confidence in purchasing items off Amazon.com.

Target Deal Days is coming back. As referenced above (and and last week), holiday spending is expected to be big (although, when isn’t it?). Target is looking to capitalize. They’ll also price-match through the end of the year. In short, they’re making it easier for shoppers to engage, taking an omnichannel approach and lowering any “purchase regret” barriers.

Dollar Tree is testing new price points above $1. Dollar Tree is growing aggressively and, beyond just location expansions, appears to be continually investing in alternative or innovative revenue growth. Customer sentiment has told them a greater assortment would be valuable to customers, according to the CEO, and have seen success in similar tests. If you’re not keeping an eye on Dollar Tree, you should be.

Amazon adds benefits to Halo, their wearable health product. They’ve expanded the Prime-like member benefits and added additional integrated features (nutrition and fitness). Big Tech has a rocky track record with the wearable wellness industry (see: Google & Fitbit), but Amazon is innovating with Halo instead of divesting.

Walmart partners with Epic for Healthcare. Essentially, this will unify patient records across their ecosystem. Epic will support Walmart’s health and wellness divisions and be implemented in the new Walmart Health Centers coming to Florida. I’ve heard the healthcare industry described as independent federations, which makes navigating the waters tricky for both consumer or business. This move will be another nudge in making customer’s lives easier.

Shoppers unhappy with grocers’ performance

Only 36% of shoppers feel that stores are doing a good job handling the pandemic, this is down from 50% in February of this year. This has to be in large part due to the labor shortage that everyone is feeling, stores just don’t have enough employees to do what they need or want to do.

Amazon Ending Free Delivery from Whole Foods

Soon, Amazon Prime Members will have to pay a delivery fee to receive their order from Whole Foods. Once again, the last mile of delivery rears its ugly head. Everyone is struggling with it, even Amazon.

Dollar General Continues their expansion

You can now find Dollar General in 47 states, and with over 17,000 stores nationwide nothing seems to be slowing down their growth and expansion.

Black Friday expected to be retails biggest day of the season

We have already heard all the predictions, holiday spending is expected to be huge this year. But, now the theory is Black Friday is going to be the pinnacle. Some stores have already committed to staying closed that day, while others are entertaining the early morning opening and resulting rush. We think the chances are high that most of this spend is going to happen online and not physically in a store setting – get ready for a midnight rush of online sales!

Thanks for reading! 

This QuickWit Weekly is brought to you by RetailWit founder Brian Higdon.  For more from Brian click here

http://retailwit.com
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