In 2021, as we gear up for the second holiday season of the COVID-19 era, we are facing a host of questions about consumer behaviour and the resilience of brick and mortar retailers.
November has begun, which means that as you read this you’re probably listening to Mariah Carey croon about what she wants for Christmas while talking heads on TV gravely discuss the global supply chain. And in 2021, as we gear up for the second holiday season of the COVID-19 era, we are facing a host of questions about consumer behaviour and the resilience of brick and mortar retailers. Will confidence in vaccines be enough to entice shoppers back to malls and department stores? Will worries about shipping delays drive consumers back to local shops? Will renewed possibilities of attending concerts, festivals, sporting events, and global travel take a bite out of the gift market? How many thousands of times will you be subjected to “All I Want For Christmas Is You?” Read on, and we promise we’ll answer most of these pressing questions.
While many armchair experts expected foot traffic to increase this year, with a craving for normalcy to push shoppers back to brick and mortar retailers, in reality eCommerce seems poised to build on the gains it made in 2020. In fact, eMarketer is predicting that revenues will grow by more than 11% this year, with online sales projected to account for $206.88 billion this holiday season. In fact, a July survey of 23,000 Americans from Shopkick found that 57% of respondents expected to do most of their shopping online this year.
Surveys this summer found that concerns over the Delta variant were rapidly growing in the US. The First Insight Group reported a 25% increase in shoppers reporting that they were “very or somewhat concerned” about COVID-19, the largest monthly spike in a year and a half. The consumers who expressed concern also reported that they would reduce their personal spending. In the UK, where new sub-types of the Delta variant are making news, we’d expect this trend to be even more intense. While this might be bad news for overall holiday spending, we expect it to lead to an increase in eCommerce revenues.
All of the hand-wringing about the global supply chain means that shoppers are likely to start buying presents earlier than ever before. Murray Lambell, eBay UK’s Vice President and General Manager, notes that many people eBay has surveyed are planning to have all of their gifts purchased “before December has even begun.” Amazon, anticipating these concerns, started offering “Black Friday Worthy” deals on October 4th, in a bid to ensure that shoppers get their goods on time.
The American National Retail Federation has predicted that holiday spending will rise by between 8.5% and 10.5%, to a massive total of approximately $850 billion. This would shatter revenue records in the US. NRF President and CEO Matt Shay feels that consumers “are going to affirmatively be out shopping for the holiday season, and they won’t go home empty-handed. One way or the other, they will shop, they will purchase and they will find that item.” In spite of concerns over inflation and fear of the Delta variant, consumers maintain that they expect to search out sales and special offers rather than limiting purchases.
But if we peek beneath the triumphant headlines, the rise in consumer spending isn’t unalloyed good news. Industry wide challenges, including backlogged ports, a global shortage of microchips, and COVID related factory closures are almost certain to lead to increased costs. And shipping challenges have even driven some brands, like Lululemon, to resort to moving goods by (the more expensive) air-freight. It’s likely that all of these costly challenges will be passed on to consumers, either through inflated prices, or the absence of massive holiday sales and special offers shoppers have come to expect. As the New York Times notes, while brands absorbed many cost increases early in the pandemic, “these days they’re passing the costs onto shoppers more and more, and your pocket will be taking the hit.”
Rising costs, COVID concerns, and worries about frantically tracking late-arriving packages instead of enjoying Christmas Eve are all signs that eCommerce growth on Black Friday and Cyber Monday might go stratospheric in 2021. In fact, almost every major US retailer has already announced that their stores will be closed to the public on the Thanksgiving holiday, with many citing safety concerns and employee appreciation as the reason. This means that things are likely to get wild online, even before the turkey is served.
Last year, many retailers were sold out of deeply discounted items and trending gifts before the sun even rose on Black Friday. Industry analysts expect this to intensify in 2021. Many retail experts say that adding in-demand items to your cart prior to the beginning of the sale is “the new waiting in line.” With some experts predicting a 20% increase in total spending year on year, the confluence of Delta, inflation, shipping delays, and increased familiarity with eCommerce likely mean we’ll see previous online revenue records get absolutely smashed.
While last year many shoppers were online out of necessity, improved customer experiences are making eCommerce more than a necessary evil. A survey conducted by AI messaging firm LivePerson found that this Christmas, 45% of shoppers were interested in experiencing VR showrooms, and 44% were excited about exploring AR and VR shopping tools. Another survey from Sitecore found that a whopping 91% of retailers were planning to improve and enhance VR and AR offerings by the end of this year. This is a “what have you done for me lately” world. Consumers who were happy to avoid queues and infections shopping from home last year are about to demand that you deliver the sense of fun, discovery, and adventure that they used to enjoy in department stores and malls. If you can’t, we recommend getting in touch with Adimo before they find another platform that can!