2021 Holiday Retail Blog Series: 2021 Holiday Retail Trends and Industry Forecasts
Published: September 15, 2021
Author: Diana Gordon
Data from eMarketer shows that 2021 is already shaping up to be another record-breaking year for holiday shopping. According to the National Retail Federation, retail sales in 2021 across the board are expected to increase 6.5%, with more than 20% growth in eCommerce – some of which can be attributed to the holidays. This comes amidst another unusual year where broader economic, societal, and commercial factors are shaking up how brands should plan their activities.
Post-COVID Economic Trends Impacting the 2021 Holiday Shopping Season
Earlier this summer as we were planning for this blog post, COVID-related economic impacts appeared to be rebounding. Job creation had surpassed industry expectations and annual comps in both June and July. Then, amidst the rising number of COVID cases due to the Delta variant, the August jobs report was a huge disappointment. Only 235,000 new jobs were added, which was much less than the near 700,000 jobs that analysts predicted.
Compounding matters, a number of pandemic-era entitlements and protections were allowed to lapse, giving even more consumers something to be worried about.
On August 26th, the Supreme Court voted to end the eviction moratorium that was intended as a life raft for more than 11 million renters who have fallen behind on their rent due to the pandemic. Now, more than 3.6 million people face the risk of eviction.
Federal unemployment benefits
As of early September, nearly 12 million Americans will face either a total termination or a reduction of the Federal Unemployment Insurance they were receiving. A polarizing benefit, the extra unemployment payments were a lifeline for many Americans impacted by job loss, but it also bolstered spending power for some too.
Return of indoor mask mandates
While not a federal program or entitlement, late August brought the return of indoor mask mandates around the country for both vaccinated and unvaccinated individuals. This, coupled with consumer fears of the more transmissible Delta variant, are a likely reason we saw the reduced August job numbers, which had primarily been previously growing in the hospitality and services sectors.
Continued rate of inflation
Throughout the summer, price inflation was a big part of what we were watching. We wanted to see if the increased Consumer Price Index (CPI) would have a wider impact on shoppers’ wallets. This week’s report showed that the CPI is still higher than normal and will have an increased impact on consumer spending, as their dollars just don’t go quite as far as they once did.
Biden’s comprehensive plan
Just after Labor Day, President Biden came out with additional provisions and mandates aimed at getting the last remaining eligible adults vaccinated. His use of OSHA to implement updated guidelines for companies with greater than 100 employees is a Hail Mary attempt to curb the rise in cases and hospitalizations that have brought the economic recovery we saw in the early summer to a potential standstill.
It’s not all doom and gloom though, as there are still a number of factors bolstering consumer spending and giving shoppers (and brands) hope for a near-normal holiday season. For example, the enhanced child tax credit that was implemented in July provided – on average – an extra $428 per month to families with children aged 6-17. These payments are expected to continue through the end of the year. Additionally, the federal student loan repayment hiatus has been extended through early 2022.
Pandemic Consumer Behaviors That Will Carry Over into the 2021 Holiday Season
Despite all the economic uncertainty that this summer’s Delta variant surge brought, we still recorded a number of new behavioral shifts when it comes to how consumers shop and brands should take notice, as these could make or break your holiday goals.
No longer is shopping about “online vs. in-store,” but rather a hybrid of the two. Consumers who became very comfortable with online shopping are going to continue to use this method to discover and order the items they want this holiday season. Expect to see heavy pushes from all retail sectors around “Buy Online, Pickup In-Store” options (BOPUIS).
Shop til you drop
Additionally, consumers are planning to start their shopping earlier than ever before. This has been an ongoing trend for years now, and something we expect to continue in 2021. Even Amazon moved up its annual Prime Day sale by a few weeks, kicking off the start to holiday shopping for many.
Another trend that emerged from the ashes of 2020 was a focus on shopping with purpose and intention. For instance, Google searches for “Black-owned businesses” are up approximately 20% from 2019 levels. And as many shoppers are still working from home, local businesses in their communities will benefit from increased foot traffic and interest.
Shopping Categories That Will Be Big Winners in 2021
We monitored summer shopping events and believe they will be a good indicator of what categories we can expect to be big winners during the holidays.
Category #1: Health/wellness and personal care
Items like teeth whitening strips, electric toothbrushes, and plant-based protein powder were very popular during Amazon’s Prime Days event in June of this year. As companies began to delay their return to office plans yet again, we should expect continued emphasis on being camera ready.
Category #2: Dressed to impress
Apparel is another category that should see big gains this holiday season, as many consumers delayed clothing purchases last year. Expect both luxury and secondhand fashion to see increased interest.
Category #3: Out and about
While we’re still waiting to see what happens with the rise in COVID-19 Delta variant cases, the concept of experiences as holiday gifts are likely to resurface. Look for gift cards and trips to be a big part of the holiday season.
While a lot has changed in the world over the last year and a half, one thing remains the same: you need to be prepared to take advantage of the huge opportunity the holiday retail season brings. By putting the right plan in place, you can expand your brand to new audiences, convert more customers, and grow revenue.
Stay tuned for our additional upcoming blogs in this series, because we’ll be sharing advice and tips that we’ve seen work firsthand for our clients! In the meantime, please reach out if you have any questions or if you’re ready to start working with 3Q’s eCommerce and retail experts.