Initial results are in for the 2021 Holiday season. It certainly had its ups and downs, especially if you were planning to fly somewhere or wanted bagels and cream cheese at Zabar’s. But most retailers had more ups than downs. As Retail Dive noted:  What does seem clear by now is that, in spite of inflation, shipping and factory backups, and the continued disruptions from COVID-19, consumers kept shopping at high levels for holiday gifts.

Key takeaways (Note: Retail sales figures do not include automotive):

  • Retail sales were up. Retail sales for November-December 2021 were up 8.5%-9% over 2020, even if spend for key days (i.e., Cyber Monday) specifically were not higher. Spend was more spread out, actually starting in October, when Amazon, Target and Walmart all featured promotional days. Mastercard’s SpendingPulse report showed the total retail sales were up 8.6% YOY for the 75 days between October 11 and December 24. Increased spend this year was driven about equally by more transactions and higher value per transaction, in contrast to 2020 when transaction size drove the increase and 2019 when it was the number of transactions that pushed holiday sales up, according to Earnest Research.

  • Spend was frontloaded, more occurring in November than December. Black Friday garnered the highest sales of any day during Q4. November accounted for 50.2% of holiday sales (compared to 48.5%/48.8% in 2019/2020). Retail sales in November were up 16.5% YoY (per Census Bureau); the increase dropped to an estimated 9% in December.  Consumers were excited to be back shopping in stores into November but pulled back in December as infection rates started moving up again. Facteus observed that the increase in retail consumer spending in the five weeks leading up to Black Friday averaged 26.4% more than 2019.
  • Consumers ventured back to stores initially but then pulled back as Omicron began to spread.
    • Store traffic actually exceeded pre-pandemic levels by 2% during November, but dropped after Thanksgiving, falling 11% below 2019 levels in December.
    • Overall foot traffic for the six-week six weeks from the Sunday before Thanksgiving Day, Nov. 21, 2021, through Saturday, Jan. 1, 2022. was down 19.5% compared to 2019, but better than the 33.1% drop in 2020 vs. 2019.
  • Increases in sales spanned multiple categories, but sales for some retailers that had been doing well the previous 12-18 months declined YOY, notably Best Buy and Wayfair. Apparel/accessories, department stores, electronics and jewelry outperformed both 2020 and 2019 by double digits or more.

  • Consumer retail purchase behavior seems to be on a new trajectory, demanding convenience and immediacy.
    • Online sales continue strong, heavy use of mobile. E-commerce made up 20.9% of total retail sales during this period, up from 20.6% in 2020 and 14.6% in 2019. Consumers continued to buy online, even as they also returned to stores. The chart below shows how online’s share of total sales dropped slightly, depending on the category, vs. 2020 but still outpaced 2019. And looking at all three years, we see that more than 40% of sales were online for Apparel, Electronics, Health & Beauty, and Occasion & Gifts, and a quarter to third of sales for General Merchandise, Home, Pets and Sporting Goods. Consumer behavior appears to be shifting. According to Adobe, over 40% of online sales are through a mobile device, which is a strong motivation for marketers to build customer relationships through SMS.

    • Hybrid shopping methods – 50%-60% of shoppers used a combination of online/in-person shopping buying online and picking up in store (BOPIS), using curbside pickup and or locker pickup.
    • Same day delivery – Some retailers offered same day delivery: J.C. Penney used DoorDash, Chico’s tapped into Walmart and its new third-party logistics service, Party City chose Target’s Shipt, to name a few.
    • BNPL – Early results indicate increases in consumers taking advantage of buy now, pay later options. One such service, Afterpay, saw a 34% increase in store and online, with an 11% increase in the number of Gen Z consumers using the approach compared to the previous year.
    • Shoppable content – Retailers used social media platforms to offer shoppable content, livestreaming and other features on social media. From Hollister, Amazon, Under Armour and Walmart opening augmented reality (AR) holiday stores on Snapchat to Walmart’s Instagram interactive game on Instagram, called “Play for Joy,” where users played with a claw machine to grab virtual gifts to Pinterest TV livestreaming, retailers are looking for new ways to connect with consumers.
  • Caveats:
    • Returns may be up – Expectations are that returns will also be up for this holiday season. NRF forecasts a 13% year-over-year increase in 2021 holiday online sales to $222.3 billion. CBRE Supply Chain estimates that at least 30% or $66.7 billion worth of holiday purchases will be returned, also up by 13% year-over-year and by 45.6% over the previous five-year average.
    • 2022 retails sales may slow down – The first quarter of the year typically shows lower sales than the rest of the year. We are concerned the pull back this Q1 of 2022 may be greater than is normally seen. Facing higher costs for staple items, given current inflation rates, consumers may decide to curtail discretionary spending, at least in the short term. However, the economy is strong; employment continues to increase. The Conference Board’s consumer confidence index went up in December amidst reports of Omicron. And consumers were optimistic about expectations for business conditions and the labor market to improve on the short term.

With these results and the insights that continue to emerge as we head into 2022, we will continue to monitor both attitudes and marketplace behavior, factoring in the data as relevant to ensure informed strategies for our clients. Are you looking for an agency to help you increase your retail sales and build your brand loyalty? We’re ready to help.