April 1, 2022
Source: Inside Intelligence
Photo Source: Unsplash, Kira A.
Key factors behind holiday 2021’s retail growth
The 2021 holiday season saw the fastest retail YoY growth in over 20 years, largely thanks to accelerating wage growth, the lasting effects of government stimulus, and an elevated stock market. There are a few other reasons, however, that this past holiday season saw record numbers across channels.
Holiday shopping started early in 2021, pulling demand forward. Early Black Friday promotions were unveiled as early as October, driving a surge in pre-Thanksgiving shopping activity. Consumers were also spurred into early purchasing due to their awareness of widespread supply chain issues. According to a Digital.com survey conducted by Pollfish, 56% of US adults began holiday shopping before Thanksgiving weekend, with 28% starting before November. The Cyber Five period—from Thanksgiving through Cyber Monday—featured the heaviest spending days of the season but fell short of holiday sales expectations thanks to this early November spending concentration.
Overall holiday retail sales also grew because many early discounts and promotions were short-lived and muted later in the season. Retailers unloaded their previous season’s inventory with discounts in October and early November, then curtailed their promotions during peak season to bolster their bottom lines.
Per Adobe, with the exception of apparel and toys, every key category saw less aggressive discounting in 2021 versus the prior year. The overall level of holiday discounting was 9% in 2021, down from 14% in 2020.
Part of the strong spending growth also came from inflation. Despite healthy consumer spending, dollars didn’t stretch as far during the 2021 holidays as they usually do. The combination of constrained supply and heavy consumer demand pushed prices 3.1% higher this holiday season versus a year ago, according to Adobe. Key holiday categories like apparel (up 16.7%) and tools and home improvement (up 7.1%) were among the most affected.
And finally, following a mid-December spike in COVID-19 cases from the omicron variant, stores were able to make a quick and necessary pivot to click-and-collect, which was an especially favored shopping method in 2020. This late-season hesitancy was a boon to leading multichannel retailers, who were able to be more flexible in their selling habits, and consumers responded well. Though click-and-collect declined slightly as a percentage of ecommerce orders versus 2020 at available retailers, it still drove nearly 1 in 4 online transactions.
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