Can you feel the excitement in the air? The calendar flipped to November first and we can already taste the peppermint. Consumers, retailers, and suppliers are already poised to dive headfirst into another unique holiday season. But even with shipping delays, the persistence of Covid-19, and economic shifts, the outlook is eager and bright this year.
How are Consumers Feeling about the 2021 Holiday Season?
Consumer confidence is key to high sales in any season but especially during the crucial gifting holidays. This year, consumers face a unique cocktail of external pressures that will impact their spending.
Fortunately, the news is good.
While there will certainly be changes to how people celebrate, out of safety concerns, most people are feeling more confident about gathering with friends and family this year for Thanksgiving, Christmas, and beyond. Here are a few highlights that indicate that consumers will be spending, celebrating, and getting out of their homes this year.
For Thanksgiving, more than half of consumers will spend at least $75 on food and other related celebrations and a third will be spending more than $100, in line with past years although one-fifth of consumers are likely to spend more than they have in the past.
In-store shopping rates are also expected to rise from last year, with 47% of people planning to grab at least some gifts from physical shelves.
Perhaps most telling is that consumers are expected to spend more than 20% this year than they did last year, totaling an average of $1,447. And it’s not just on gifts for others, an average of $442 of those dollars will be spent on pampering themselves, indicative of higher levels of consumer optimism and a reaction to a tough two years.
How are Large Retailers Preparing for the Holidays?
The National Retail Federation is predicting holiday sales to reach $859 billion, an increase of 10.5%. Yet there are significant challenges that retailers are already preparing for including:
- Having enough in-store and online inventory available
- Supply chain backlog
- Labor shortages
But the good news is there are forces that should lead to higher sales, too, including:
- Covid-19 booster shots are being administered,
- Vaccines for children have been improved,
- People are returning to work, leading to more foot traffic and greater spending confidence,
- And surprisingly, La Nina the weather pattern that leads to cold and wet winters is correlated with a spike in sales.
Large retailers like Target, Best Buy, and Walmart are pushing early sales as a way to meet customer demand and encourage strong sales, even with the inventory and labor challenges. Some of the common themes are campaigns like:
- Holiday promotions and events earlier than normal
- Exclusive access for longtime customers
- And pushing people to not wait to buy something they want
Retailers and brands alike should also expect these challenges to last beyond the holidays. For instance, shipping vessels are only arriving on-time 40% of the time while the price has increased by 360%.
Retailers will continue to hone the accuracy of their demand planning and be more flexible than ever before. But retail suppliers should also pay attention to their own capacity and be creative about how to end the year with strong sales.
What Can Retail Suppliers Do to Make the Holiday Season Run Smoothly?
The name of the game this year is flexible proactiveness. Brands that are reactive to consumer demand, shipping challenges, and labor shortages will be behind and their sales will suffer before they have time to blink.
On the other hand, suppliers that are able to anticipate a changing retail environment will be able to quickly adapt their available inventory and get it into the hands of waiting consumers.
Be Flexible and Proactive
Don’t be afraid to offer replacement ideas. Many consumers will not be able to fulfill their shopping list exactly as they’d hoped. But just because the sweater they had their eye on is out of stock doesn’t mean suppliers need to miss out on a sale. Be creative and offer alternative ideas to your customer base through a mix of omnichannel marketing and in-store promotions.
Be Communicative
Customers and retailers understand the unique retail environment this year. Don’t be afraid to acknowledge when inventory is running behind. Communicate when to expect shipping delays and if needed, offer incentives for consumers to spend their dollars with you.
Be Prepared
The best offense is a good defense. In the case of retail suppliers, that means having a trusted in-store team who can make sure that product makes it from the backroom to the shelves and once it’s there, looks the way it’s supposed to based on your planogram. Services like retail audits and planogram maintenance can help brands stay on track with their sales targets.
The word “unprecedented” got worn out last year but it is fair to say that this holiday season is yet another, unprecedented challenge. Fortunately, despite the obstacles, optimism remains high. As long as you are prepared and stay on top of inventory changes, the season should remain jolly and successful.
Contact us today if you need an extra set of eyes and hands making sure your product is set, stocked, and priced correctly!
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