Media Insights

Marketer’s Guide to Holiday 2021 | Edition 2: Key Considerations and Trends

Marketers should start planning for Holiday 2021 by looking at the consumer first. Understanding key consumer and economic trends can help us anticipate what the shopping season might look like and take actions that will drive enterprise impact. Read on for the key trends impacting Holiday 2021 and what marketers can do to take action.  

 

WHO 

Consumer confidence hit a 6-month low in August, signaling that economic recovery has more headwinds as we head into fall. 

Though consumer confidence steadily increased from May to July, a downturn in August suggests that the COVID-19 climate, recently fueled by the Delta variant, continues to evolve and impact consumer behavior. So far, no meaningful changes to online shopping have been observed, but it will be vital to continue to monitor changes this holiday season. 

Unemployment has declined but is still higher than pre-pandemic. 

Hovering around 6% since February 2021, unemployment rate is still significantly higher than February 2020 at 3.5%. 

What Should Marketers Do? 

  • Referencing Back-to-School shopping behavior and performance trends will provide insights about whether consumers are ready to spend for Holiday.  
  • Continue to monitor unemployment rates and consumer confidence levels throughout holiday planning and shopping season. 

 

WHERE 

Ecommerce will continue to grow faster than stores with a focus on mobile. 

Ecomm sales will grow 11.3% compared to 2020 (and compared to 0.9% for brick-and-mortar) and represent 18.9% of total 2021 Holiday spending (up from 17.4% in 2020.)1 Additionally, mobile conversions will continue to grow generating 8.6% of total sales, and ecommerce will account for 52.7% of the season’s growth contribution.1 Target, Wal-Mart, and Best Buy are among a growing list of retailers that will be closed on Thanksgiving Day — pushing shoppers online and potentially setting the stage for the rest of the season.2 

 

Lines will continue to be blurred between site and store throughout the entire buying process. 

Online shopping experiences will continue to become more immersive as customers will look to mimic in-store experiences at home with how-to styling videos, virtual try on, and personalized recommendations. For those that want to venture outside of the home but limit in-store shopping, BOPIS (buy online pickup in store) is here to stay. Last year, BOPIS made up 25% of all holiday orders (an increase of 40% over 2019). In 2021, this proportion is expected to maintain (or even grow) for shoppers seeking convenience during the holiday crunch.1 The peak day for BOPIS usage in 2019 and 2020 was December 23 (two days before Christmas).2 

Social commerce and live streams will play a larger role in discovery and purchase than ever before. Nearly 8 in 10 consumers surveyed in 2020 used at least one Facebook app or service for discovery or gift-giving inspiration during the holiday season. This trend is expected to continue in 2021.3 Livestream events are also driving more conversion — 40% of Gen Z and Millennials interviewed have purchased something on a social media live stream.⁴  

What Should Marketers Do? 

  • Understand what worked in ecommerce and mobile last year, and what did not. Where did consumers have friction with the shopping process? 
  • Highlight convenience and build curbside, drive-thru, and in-store pickup capabilities into messaging strategies. Utilize personalized ads with preferred shopping methods to reach audiences likely to make a purchase using a specific delivery method. 
  • Develop a mobile strategy with staying power by incentivizing mobile transactions and encouraging app downloads that enable seamless purchasing as the holiday progresses. Reduce friction wherever possible to encourage easy conversion in platform. 

 

WHEN 

Cyber 5 will return to prominence. 

Representing ~20% of the holiday season’s sales, shoppers will begin shopping early, though it is not anticipated to be the same elongated season as 2020. Despite Prime Day’s return to summer months in 2021, a mix of pent-up consumer demand and concerns over supply chain shortages is predicted to drive an early start to the season once again. Cyber Monday is predicted to be the highest sales day of Cyber 5. 

 

Child tax credit payments are likely to drive spikes in shopping. 

35 million families have received the first of six advance child tax credit payments from the American Rescue Plan. Each month through the end of 2021, qualifying families (HHI up to $150,000 for a two-parent household) will receive $250 or $300 per child, depending on the child’s age. The payments will be deposited 7/15, 8/13, 9/15, 10/15, 11/15, 12/15.6  

 

What Should Marketers Do? 

  • Develop a plan for Cyber Five’s return and avoid using 2020 as a guidepost for performance during key sales events. 
  • Don’t assume consumers are done shopping after Cyber Five. Use messaging to stay top of mind through late December — and don’t forget to highlight fulfillment methods that can ease the last-minute shopping crunch (remember, the peak BOPIS usage day has historically been December 23rd). 
  • Be nimble and prepared for the potential of another Prime Day in October. Amazon could surprise us again. 

 

WHAT 

Expect spend on apparel, travel, events, and experience will grow. 

The increased consumer spend in services (travel and hospitality) seen over the course of Q2 will carry into the holiday season as shoppers continue to transition out of the pandemic economy. This spending shift will heighten competition during the holiday season as retailers engage consumers looking to spend across a broader range of categories. 

 

Apparel will rebound as pandemic-related headwinds soften. 

Pent-up demand for upgraded wardrobes will drive a boom in apparel and accessories across buying channels in 2021. 

 

Back-to-school will be an indicator of upcoming holiday performance and consumer shopping behaviors. 

Retailers looking to predict holiday performance in 2021 will use back-to-school results as a gauge for post-pandemic consumer behavior against the backdrop of continued pandemic uncertainty. 

 

What Should Marketers Do? 

  • Analyze your pandemic category performance and compare with latest trends to help anticipate holiday preferences. Keep a close pulse on season-to-date results to enable fast reaction to change. 
  • Understand the customer profile for your business and discuss how economic changes or post pandemic circumstances may shift buying behavior. 
  • Develop scenarios that can mitigate risk for high, medium, and low demand. Be prepared to shift focus and react quickly to inventory constraints and unexpected results. 

 

HOW 

Prices are rising compared to last year as supply chain pressure continues and given observed lower prices in 2020. 

In June, prices overall were 5.4% higher than the previous year – the largest YOY gain since 2008. Whether consumers will act differently because of these higher prices is unknown. Many might not notice because of their excitement to shop again, and others may feel able to afford it after a year of unprecedented savings, stimulus checks, and child tax credit payments. 

COVID outbreaks and extreme weather are reducing the supply of many goods. 

Heavy typhoon season in China has caused some of the world’s busiest container ports to reduce operations, stranding shipping containers. Tropical cyclone season is expected to be more severe than normal; the latest estimate is that four to six typhoons will make landfall in China before the end of 2021. COVID outbreaks continue to require factory slowdowns (and shutdowns in some cases) in India and China. 

As the more contagious Delta variant becomes more prevalent in the US, American manufacturing facilities could be impacted too. Many manufacturers have had to increase prices because these supply chain pressures have impacted their costs so much. Popular toys, clothing, and footwear could see significant shortages during this holiday season. 

 

What Should Marketers Do? 

  • Brands will have to work especially hard to exceed expectations on higher-priced goods and relentless planning to ensure in stock inventory. 
  • Be proactive and have ongoing communication with inventory and operations teams to ensure advertising is featuring in stock products. 
  • Ensure the shopping experience exceeds consumer expectations and is frictionless to encourage seamless sales. 

 

We have given you a lot to consider, but don’t panic. The holiday season represents a significant opportunity for marketers. To win this season, marketers must maximize enterprise return through a fluid investment strategy, align operations and logistics with marketing, and expect the unexpected. For more on holiday preparation and execution, download our Marketer’s Guide to Holiday 2021 or connect with us 

Ovative is a digital-first media and measurement firm seeking to transform the measure of marketing success. At Ovative, we help brands move the needle. We are curious. We value your brand. We want to see you succeed. Connect with us to learn more! 


SOURCES

1 | Big name retailers update 2021 holiday strategies amid evolving shopping habits, eMarketer

2 | US Holiday 2020 Review and Holiday 2021 Preview, eMarketer

3 | 5 ecommerce trends for 2021, eMarketer

4 | How Can Brands and Retailers Prepare for the 2021 Holiday Season, AdWeek

5 | Facebook Holiday Insights Narrative

6 | Your Child Tax Credit Payment Just Arrived, WSJ


Emily Baker

Manager, Consulting

About the Author

Emily Baker is a Manager on the Consulting team at Ovative. She loves solving the hard problems her clients face and enjoys bringing a customer-centric approach to media and marketing strategy. Emily came to Ovative from Target with five years of experience in merchandising, supply chain, and logistics.

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