What retailers can learn from the 2021 holiday shopping season

What retailers can learn from the 2021 holiday shopping season

What retailers can learn from the 2021 holiday shopping season

The 2021 holiday shopping season was historic, in that it was the culmination of two years of accelerated trends, shifting consumer behaviors, and omnichannel shopping realities that have emerged since the start of the pandemic.

Sales in November and December broke records as consumers embraced eCommerce, returned to physical stores, leveraged their smartphones to shop, and started their holiday shopping earlier than ever.

In this post, we look at the most important trends and statistics that emerged from this pivotal holiday shopping season and unpack what it might mean for retailers in 2022.

Online holiday shopping sales surpass $200 billion.

In 2021, for the first time ever, November and December online sales surpassed $200 billion, per data from the National Retail Foundation (NRF). Total retail sales increased by 14.1%, the highest jump in decades, thanks, in part, to shoppers returning to physical stores.

There was also a sharp increase in retail sales in November compared with previous years. According to data from Earnest Research, November sales were up 9% versus 2020.

An earlier-than-usual promotional push from retailers contributed to this, as did supply chain worries which prompted both retailers and consumers to kick off the holiday shopping season earlier than ever before.

Ecommerce drove seasonal growth, even for traditional retailers.

The global eCommerce market more than doubled from 2015 to 2020, 8% to 18% respectively, according to data from CBRE. CBRE’s data demonstrates that eCommerce penetration was happening across most global markets before the pandemic, but it truly exploded during the holiday shopping seasons of 2020 and 2021.

Walmart’s eCommerce sales grew 90% in 2022 versus two years ago, before pandemic shutdowns drove consumers out of stores and online. Walmart operates over 10,500 stores and clubs in more than 24 countries. This gave the retail behemoth an advantage over (most) eCommerce-only retailers since their stores doubled as fulfillment centers. In fact, the number of online orders fulfilled from Walmart’s stores grew by 170% year over year in fiscal 2022, on top of a 500% gain from 2020 to 2021.

According to Statista,  Amazon and eBay were the most visited eCommerce websites in 2021, but traditional retailers including Costco, Walmart, and Target ranked among the fastest-growing US companies based on online retail sales growth.

The phenomenon of physical stores contributing to a boost in eCommerce sales, while eCommerce sales likewise contributing to a boost in in-store purchases, is relatively new. It represents the blending together of what used to be siloed shopping experiences.

Early holiday sales curtailed last-minute retail spending.

Urging consumers to shop for their holiday gifts earlier than usual (in some cases, retailers began announcing holiday shopping events prior to Halloween) didn’t necessarily extend the holiday shopping season.

What ultimately happened was that holiday shopping peaked in November, with just under 50% of consumers taking advantage of early holiday shopping sales and promotions before Thanksgiving 2021. This meant that fewer consumers saved their holiday shopping to the last minute, according to data from Sensormatic, a company that makes electronic surveillance equipment for traditional retailers.

In their report, Unboxing the 2021 Holiday Shopping Results, Adobe calls this the “out-sized pull forward effect,” noting that early seasonal sales created a surge in demand, ultimately leading to weaker momentum during the Cyber 5 shopping period (the concentrated shopping period from Thanksgiving through Cyber Monday).

A few additional factors contributed to the shift to earlier spending, the biggest being supply chain concerns from retailers that were communicated to consumers. Out-of-stock notices on retail websites increased by 253% in 2021 versus 2020, with over 6 billion out-of-stock messages served, per Adobe data.

Shoppers return to stores, while omnichannel retail remains strong.

The widespread availability of vaccines in the U.S., combined with a desire for people to get back to normal, drove consumers back into physical stores throughout November and December.

Sensoramic reported that foot traffic in stores increased nearly 19% over the previous year during the period of Nov 21, 2021 through January 1, 2022.

Meanwhile, consumers continued to embrace hybrid fulfillment methods including buy online pickup in store (BOPIS), curbside pickup, and ordering online for same day delivery. Per Adobe, retailers who offered curbside/BOPIS options received about 23%, or 1 in 4 orders, leveraging these options. This is down from 40% the previous year when lockdowns were common and in-store shopping scarce.

Of the 48 retail chains classified by Digital Commerce 360 as top merchants, 30 used their homepages to encourage shoppers to use omnichannel options including buy online pickup in store, curbside pickup, and same-day delivery.

Consumers embrace BNPL and other payment options.

If there’s a standout trend from 2021, it’s that consumers like options, particularly when it comes to how they pay for their purchases.

The use of flexible buy now, pay later (BNPL) providers like Afterpay, Zip, and Affirm reached an all-time high in the U.S. in December, with 8.4 million U.S. users opting for a BNPL option. This represents a 20% YoY increase for BNPL purchases from 2020 to 2021.

Consumers also embraced the use of digital wallets, QR-code payments, and digital invoicing for B2B purchases. In their 2022 Commerce and Payments Report, Global Payments notes that:

  • 4.4 billion global consumers will shop with a digital wallet by 2023.
  • QR-code payment users will reach 2.2 billion by 2025.
  • Digital invoicing is expected to grow by a compound annual rate of 20.4% from 2019 to 2027.

And in a new twist to an old standard, consumers are much more likely to use their credit card for an online purchase than before the pandemic. The Global Payments trend report notes that March 2020 was the first month that card-not-present transactions surpassed card-present transactions and this trend hasn’t reverted.

There weren’t as many holiday deals in 2021, but that didn’t deter shoppers.

Perhaps one of the most compelling statistics to come out of the holiday shopping data for 2021 is that even though retailers offered fewer discounts and deals, sales remained strong (though not quite as strong as in 2020.)

According to Adobe, spending by U.S. consumers during the Cyber 5 period reached a healthy $33.9 billion, but was down 1.4% compared with 2020. However, it was up 20% from 2019 ($28.5 billion).

Digital Commerce 360 attributes the dip in spending to inventory scarcity, higher prices, and weaker discounts.

Chart Description automatically generated

Source: Digital Commerce 360 Report—Unwrapping The 2021 Holiday Season

People shopped on their smartphones throughout the entire 2021 holiday season.

Last, but definitely not least, is the new normal of smartphone shopping. Per Adobe, Smartphones contributed to 61% of holiday visits and 43% of holiday spend to retailers in 2021, up from 60% and 40% in 2020. That’s roughly $88 billion in revenue, most of which was received on six days between 11/25 and 12/26 in 2021.

Mobile commerce—or mCommerce—is a trend that’s not going away. eMarketer predicts that mCommerce will nearly double its share of total retail sales between 2020 and 2025 to reach over $725 billion in the US by 2025.

A variety of mobile payment options like PayPal (used by 210 million global customers), Apple Pay, Amazon Pay, Google Pay, and Visa Checkout which store credit card and/or bank account information  make it easier for shoppers to safely and quickly make a mobile purchase.

Mobile commerce apps also bridge the physical/digital shopping divide, allowing customers to easily track, manage, and fulfill online orders which they can then pick up locally at the store.

What does this mean for your 2022 eCommerce strategy?

Post-pandemic consumers are much more likely to take an omnichannel approach to shopping. Per data from the Global Payments 2022 trends report, over half of consumers consider themselves more digitally savvy than ever. Nearly 40% of consumers shop from a smartphone either daily or weekly, and 23% say they shop online at least daily.

We predict that the line between traditional and digital retail will continues to blur throughout 2022, with omnichannel shopping journeys that incorporate a variety of devices, channels, and touchpoints becoming the new normal.

Flexible commerce solutions like a unified commerce platform will be key to helping retailers deliver on the promise of modern, omnichannel shopping experiences.

Kibo’s headless, API-first, microservices-based architecture gives retailers the flexibility to quickly launch personalized commerce experiences which are customizable and extensible. Some key features that address the above trends include:

  • Unified cart and checkout: Centrally manage the buying process across all of your channels, allowing customers to move from channel to channel seamlessly and consistently.
  • Omnichannel order fulfillment: Provide a full-range of customizable order fulfillment options like BOPIS, curbside pickup, ship from/to store, drop ship, and ship to home. Balance your inventory across channels.
  • Segmentation & targeting: Leverage machine learning to uncover customer segments based on customer interactions. Collect and use data to drive personalized experiences that can be optimized across all customer touchpoints.

Unified commerce centralizes all your commerce technologies in one place, enabling you to eliminate blind spots that occur when channels are siloed. By factoring every consumer interaction from all touchpoints—online, offline, and mobile—unified commerce allows retailers to respond to market forces proactively.

It’s clear that retailers who took a unified approach to things like order fulfillment and inventory management during the 2021 holiday shopping season were in the best position to meet high consumer demand, navigate supply chain issues, and efficiently fulfill orders.

Contact us to learn more about Kibo’s Unified Commerce Platform or speak with a sales representative about how your company can benefit from a headless eCommerce approach.

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