Christmas 2021 is fast approaching, and e-commerce retailers should be engaged in answering those key questions: have I been naughty or nice, and what is Santa likely to bring me in the way of retail success this holiday season?
The problem is that answering this question is getting harder, and the answer doesn’t depend on just you.
It never really did, of course. But now, the retail landscape has changed dramatically for both e-commerce and brick-and-mortar. Changing market factors and global events over the last year have given cause for both e-commerce retail optimism and profound pessimism, which is why you often seen retailers – especially small to medium retailers – ripping their hair out while trying to run in multiple directions at once.
And we’re coming up to a holiday season that, for many retailers, will be critical to their survival. If you’re already hanging onto your hat, that’s probably wise.
So, will this Christmas bring e-commerce retail feast or famine?
Opinions, Pundits, Data, and Disarray: Predictions Galore
As always, those of us who spend time searching the web or culling through our newsletter subscriptions find ourselves flooded with holiday-related predictions from various retail authorities.
Whose predictions should we believe? It’s often hard to tell.
According to RetailWeek, we should see a bounce-back of over 10% in fashion sales over last year’s fourth quarter. Consumers are expected to socialize more frequently and there will be a good deal more partying to help drive sales in this area. Similarly, sales of health and beauty products should go up by almost 7%, and toys and games by more than 5%.
And, because consumers are concerned over supply and stock issues, they’re starting to shop earlier and driving spikes in demand and retail activity levels.
On the other hand, there are those who think that this Christmas season will be incredibly stressful for e-commerce vendors. The reasons for this: despite greater willingness on consumers’ part to shop online and order from abroad, shoppers have some real doubts about getting their orders before Christmas.
They’re in need of reassurance from vendors in the form of accurately estimated delivery dates, and that puts pressure on e-commerce vendors to check and recheck their supply chains.
You know – those supply chains that have been battered unmercifully in recent months. In terms of international shipments, there are new concerns over port delays, the streamlining of import processing, and all the related paperwork for e-commerce retailers, especially as between the UK and the EU.
Then there’s the ability of e-commerce retailers in particular to be ready with special pre-Christmas deals sooner than normal. Plenty of opportunity there, but also plenty of headaches relating to inventory control, pricing concerns, the avoidance of “discount wars,” and so forth.
In fact, various industry leaders quoted in a September 25, 2021 piece on the Forbes website suggest that 2021’s potentially strong Christmas season for e-commerce will hinge on the impact of potential lockdowns and other pandemic-related issues, accurate assessments of the strength and timing of consumer demand, “website preparedness” in terms of small and medium retailers’ ability to ensure sufficient demand-handling capacity, and potentially ruinous supply and logistics problems.
What Else Do We Know?
Actually, we know a few other useful bits of information.
- Given the early start shoppers are getting on their Christmas shopping this year, savvy retailers should be well into planning their strategy and tactics for Black Friday (November 26), especially as there’s current research suggesting that over 80% of shoppers will be actively buying at that point. The surge will continue over the Christmas period, and there’s likely to be more omnichannel activity than ever before. Sales via mobile will increase significantly, as will international D2C purchases.
There may even be reason to think that nature of the Black Friday weekend is changing in interesting ways, one of which is that it may become part of a “rolling season of deals,” per Mike Black of Profitero in a comment to Retail Brew.
- There are already supply shortages across sectors, and that fact is part of what’s driving shoppers to start buying earlier than they otherwise might. Some of the problems are logistic in nature, and some products – especially where goods requiring semi-conductor chips are concerned – are in short supply because important far eastern manufacturers have either closed their doors or are operating at significantly reduced capacity.
- In the US, the Biden administration is struggling with serious transportation issues and choke-points in supply chains. Inflation is up; earnings outlooks are starting to show signs of pessimism, and the White House has actually suggested that American consumers will likely face increased prices and “empty shelves” over the holidays.
Clearly, this news means all US retailers must be far more proactive in securing their Christmas stock requirements and ensuring they can address increased demand in the face of growing fulfillment issues. The problems extend across industries and sectors, and consumers are likely to be unimpressed with supply issues and rising prices as inflation hits their salaries and buying power.
- In addition to being concerned about supply chain and fulfillment problems, e-commerce retailers would do well to think about how they can improve their handling of returns and related customer support issues as Christmas approaches. Returns by delivery are likely to be slower and more cumbersome when there are ongoing shipping and delivery issues, and consumers may become cranky quickly if they have return troubles.
- Then there’s the whole issue of holiday-related retail jobs, and the fact that, at least in the US, brick-and-mortar retailers (and e-commerce retailers with warehouses and fulfillment centers) may find themselves seriously understaffed if they haven’t been proactive.
To be clear, when we talk about being proactive, we’re not just talking about advertising open retail positions before you find yourself strapped for paid help. According to Retail Dive, there are major physical retailers who are planning to offer increased minimum wages, and in e-commerce, Amazon is incentivizing certain new sign-ups dramatically with bonuses and added benefits.
Given that August saw over 720,00 retail staff quit their jobs, US retailer concern is understandable. A particularly telling statistic: there were 1.2 million open retail positions as of August of this year. In August 2020, the number was 734,000. Yet hiring for Christmas retail this year has been slower than expected.
Christmas will soon be here…
Other Christmas Retail Thoughts…
There’s also some interesting research from Klarna (as noted on the Retail Technology Review website) suggesting that where consumers’ omnichannel experience is concerned, there’s a growing burden on retailers to better coordinate their efforts as between physical and e-commerce modes.
The gist: consumer expectations are growing, expanding across channels, and becoming increasingly refined and clear. There’s now a gap between what shoppers expect from every part of the omnichannel experience, and what retailers actually deliver based on faulty assessments of their shoppers’ expectations. Omnichannel success this Christmas will flow first to those who have taken the time to address the disconnect.
Of course, despite the potential obstacles to a strong Christmas retail season for e-commerce vendors, the news isn’t all bad.
In fact, the consumers are out there and actively shopping for Christmas. Many seem to have saved up quite a bit of discretionary cash while coping with lock-downs and other events that have been cramping their retail shopping style.
- In the US, INMOBI’s research suggests a healthy outlook for mobile and holiday purchases, as well as purchases of products for the home. INMOBI also found consumers eager to shop at major e-commerce retailers for reasons relating to product choice, prices, and the sheer convenience they expect from transaction through fulfillment. The company believes retailers should highlight the convenience aspect in their marketing, but should also take steps to ensure their supply-chain health so that they can meet growing demand. INMOBI also is strong on differentiating communications as between target consumers this season – as we’ve suggested in other posts, it’s a good time to go heavy on personalization…
- In a September 20, 2021 post on the Forbes website, Andrea Wasserman (Yahoo’s Head of Global Commerce) notes that even though US consumers can for the most part get back into brick-and-mortar stores and will do plenty of buying, this year’s e-commerce holiday sales should amount to almost 19% of the total.
Yahoo’s research also shows consumers planning to do more shopping this year, and they’re willing to explore new brands and work with new vendors. Opportunity will be knocking for those who are ready to take advantage. In addition, Wasserman also sees consumers’ desire to explore new ways of shopping digitally as a chance for retailers to explore AI/AR personalization strategies, immersive “shoppable videos,” virtual stores, and more.
- In terms of the US economy’s general strength, recent results posted by the major US investment banks suggest that things might actually be a better than some people think. Based on Q3 2021 results, the negative economic impact of the pandemic has thus far been less damaging to the banks than originally feared, consumer debit card spending is up, and stock trading is strong. Inflation will remain around for a while and may help pop some bubbles before they get out of hand.
So Where Does That Leave Retailers?
From our perspective, the 2021 Christmas season presents both e-commerce and brick-and-mortar retailers with unique opportunities, serious challenges, and a decidedly lower level of certainty and predictability than most will find comfortable.
On the one hand, consumers are already shopping, and we suspect that as supply issues become more problematic in the coming weeks, retail activity spikes will move from “unusual” to “extraordinary.” Shoppers are willing to spend, and the circumstances are such that almost all of them will “want it right now.”
Retailers who can fulfill demands on the spot will experience markedly better conversion rates, and will find their consumers willing to support alternative pickup or delivery methods, including curbside/contactless, BOPIS, and more. Those who are able to provide seamless omnichannel experiences with innovative technology on the way to completed transactions should do very well indeed.
It’s also likely that shoppers, easily frustrated when confronted with lack of product availability, will become more demanding, and more strident in terms of complaints about supply-chain problems. This may cause faster consumer decisions, including decisions to make alternative purchases, to abandon, or even to drop brand loyalty and move on quickly in order to secure the items they want elsewhere.
There are also those events none of us can anticipate, other than in the most general terms. Pandemic variants or spikes, geopolitical events that further obstruct supply-chain functioning or manufacturing at source, economic crises…we may feel that we’ve seen enough of that stuff to last several lifetimes, but these are areas in which we simply can’t make accurate predictions any more.
The result: this Christmas season may present retailers with both feast AND famine. The trick is to adopt a proactive approach in all aspects of your retail enterprise, and do everything you can – in every area of your business – to hedge the odds in your favor.