2021 Holiday Shopping Trends: Revamping Traditions To Meet Retail’s Reality
Consumers are willing to pay for peace of mind this holiday season
This holiday season, people are eager to make up for the predominantly virtual celebrations and restricted gatherings of 2020. Excitement for the holidays is manifesting with an extended seasonal period that kicked off as early as October: holiday decorations are going up by Halloween, TikTok feeds are flooding with gift guides, and shopping is starting for 45% of Americans. While the enthusiasm to make up for lost time is a factor, it’s not just joy that’s driving an urgency for holiday magic.
After two years of uncertainty, the rising concerns around shipping and shortages are pushing more people to secure and stockpile gifts well ahead of December — even if this means forgoing seasonal sales and experimenting with new channels. Above all, this prolonged holiday shopping season is pushing brands to engage in new ways and provide more meaningful digital experiences to win hearts and wallets this year.
Death to Doorbuster Deals
An extended holiday shopping season means less of an emphasis on the “must-have” items and deals of years past. Due to a host of issues, including a breakdown in the global supply chain, most retailers are unable to promise significant markdowns, shifting consumer focus away from tentpole shopping moments like Singles Day, Black Friday, and Cyber Monday.
With inflation at a 13-year high of 5.4% in the US, limited inventory in-stores, and inevitable shipping delays, retailers are raising prices to keep afloat. It’s estimated these global supply-chain issues will persist well past the holiday season as retailers navigate factory and warehouse shutdowns, rising costs of raw materials, inbound freight delays, and an ongoing labor shortage as 4.3 million Americans quit their jobs in August.
Surging “post-pandemic” demand means wish lists are longer than ever — whether items are discounted or not. It’s quite possible the era of peak discounting has passed and it may be years until the pendulum swings back.
Without these much-anticipated doorbuster deals to bookmark shopping calendars, people are checking off their lists earlier than ever to ease holiday anxiety: only 11% of US consumers will wait until December to start their shopping.
Uneventful Events
As the holiday shopping season (and the little discounts left) stretch earlier than ever, the typical spending events are losing their intensity. This year Alibaba’s Singles’ Day grossed 540.3 billion yuan ($84.5 billion) through the first 11 days of November. While that’s an 8.5% increase from last year, it’s lower than forecasted by Citi analysts. On top of China also facing inflation and supply issues, the underwhelming sales can be credited to two additional factors, both of which reveal important takeaways for retailers outside China.
First, the drawn-out promotion period undermined the magnitude that Single’s Day typically holds. A shipping manager reported to Chinese media that “70% of Singles’ Day orders they processed were placed before Nov. 11.” In the US, Walmart has proclaimed “Black Friday Deals for Days,” rolling out multiple promotions throughout November. Even Amazon will have a two-day event for Black Friday. Not only are longer sales and pre-sale windows causing these events to lose their draw, consumers are also evolving their priorities to value assurance over price. After pandemic burnout, people are craving peace of mind over the thrill of savings — especially when the ‘savings’ are mostly underwhelming.
The second notable difference for Singles Day was the shift from promotional sales to overall sustainability and inclusivity — both table-stakes in the future of business. While these are extremely important to integrate into retail strategies and operations, they can lack sincerity when rolled out on the biggest sales day of the year. The cautious move away from major marketing and toward more values-based positioning was clearly intentional following anti-monopoly regulations Alibaba faced in the recent past.
That being said, Alibaba backed up the new commitments authentically by highlighting more energy-efficient products, reducing the carbon footprint of the event, giving out 100 million yuan ($15.6 million) of green vouchers, and creating a more accessible app experience by enhancing the interface and including voice-assisted technology. It’s encouraging to see strides being made toward a more responsible retail future — even if this pivot impacted sales. For retailers outside China, the heightened empathy of the holiday season creates the ideal environment to test this values-driven approach.
Retail-tainment Reigns
With traditional holiday shopping events losing momentum, retail-tainment is dominating. Experiential is now a key opportunity to drive distinction for retailers, and of course, create a more dynamic and entertaining interaction for consumers. The expectation among shoppers this holiday is to divide up their purchases: 44% of Americans aged 13 to 39 will do their holiday shopping equally online and in-store. Whether the objective is to drive more people to shop brick and mortar or increase participation in a shoppable stream, people are expecting more immersive and unique experiences to shop this year.
For example, Gucci and Balenciaga have come together to launch a holiday pop-up series called the Hacker Project that entices shoppers to browse and buy exclusive gifts this season designed to signify a turning point in luxury. With different chapters of the pop-up rolling out over the course of the season, there’s an increasing incentive for people to re-visit locations before they miss out.
Live commerce is also supplementing experiential shopping to drive more engagement and connection through shoppable media. For the 76% of shoppers that get gift ideas online and the 68% of Gen Z shoppers that will purchase holiday gifts through social commerce, offering enhanced discovery is essential. The “live” element of shoppable commerce offers dual benefits: for those who tune in at the time of a live event, it creates an urgency and excitement to purchase while watching; But as the hustle and bustle of the season creates more noise in-feed, retailers are testing “rolling-live” models where viewers can stream live events anytime and still comment and engage with other viewers who happen to be watching.
For the first time, YouTube is hosting a week-long “YouTube Holiday Stream and Shop” kicking off with creators like the Merrell Twins who will host a “Wish List Live” show featuring multiple brands and influencers. For many shoppers, this experience marries product demonstration and endorsement. People feel satisfied seeing products from their trusted sources and appreciate the convenience of shoppable commerce. While livestreaming is gaining popularity during the holidays, the strategy of creating and eventizing new shopping moments through live commerce will be utilized throughout the year. TikTok has been testing this with Walmart since spring.
Creative Consumers Time to Shine
Some people love to play Santa Claus. These are the gift-givers who lean towards thoughtful and personal presents, and prefer to curate their holiday shopping outside of Amazon, Walmart, Nordstrom, and other retail giants in order to seek out more unique gifts for their loved ones. This group of creative consumers are willing to explore new and different shopping channels in hopes of avoiding supply chain woes and shipping complications: 49% of US shoppers said they’re considering alternative gifts this holiday season, such as making a resale or second-hand purchase. 2021 is their time to shine.
Every year people are growing more comfortable with shopping second-hand as the stigma of used items decreases and online retailers make it more convenient to shop. The resale market will now be an emerging player of the holiday retail landscape to provide unique and vintage gifts: 77% of American adults said they expect to buy at least one secondhand item this holiday season. Not only is it a practical choice, resale sites like The Real Real and Depop are also making it increasingly easy to shop for curated specialty items. In addition, the inherent sustainability of shopping used marks resale as a rising contender for on-trend gifting this year.
Besides resale, these creative consumers are also expanding their shopping network to include a patchwork of connected communities, such as Instagram, Reddit, and TikTok, that deliver more individual and unexpected gift ideas. Discovery on TikTok, for example, is fueled in part by the intelligent recommendations of the algorithm and also by the creative content style that features festive videos and holiday music — 87% of Gen Z consumers are planning to use TikTok to find holiday shopping inspiration. Plus, with popular hashtags like #christmaswishlist2021 receiving close to 60 million views, Gen Z’s best-kept secret is expanding to reach broader audiences. As the shoppable capabilities and experience become even more seamless, this represents a key opportunity for brands and retailers to broaden attention and build connections in the holidays to come.
Want to learn more?
Here at the Lab, we’re committed to understanding the future of retail, and holiday shopping is a crucial element of that. We’ve been tracking the retail category’s rebound throughout the pandemic and its multifaceted evolution this holiday season.
If you wish to dive deeper into this report, or simply start a conversation around key retail trends, please reach out to our Group Director Josh Mallalieu at josh@ipglab.com.
