Key takeaways from consumer research include:
• Consumers have not pulled holiday shopping forward. In fact, shoppers report being approximately 7% behind the level of spending vs. last year as of early November
• Potential inventory shortages will affect behavior leading to a shift of more than $60 billion in spending among retailers this holiday season
• While more than 85% of consumers plan to go to a store for their shopping, they anticipate the experience will rate a 4.5 out of 10
• Addressing unmatched demand, numerous constraints, and low expectations will require the next level of agility and execution. However, the rewards are significant for successful retailers
Holiday Demand and Timing
Virtually all demand signals in the market are pointing to a ‘once in a generation’ holiday. In our proprietary research fielded from November 4-12, 2021 (N=2,519), approximately 26% of respondents have not started their holiday shopping as of early November this year versus 22% last year. Overall, consumers report having approximately 7% less of their holiday shopping completed this year versus the same point last year. “This has been a hectic, complicated year for consumers. Delayed shopping, combined with a financially healthy consumer, pent up desire to celebrate a more normal holiday, and other factors will lead to an elevated demand over the next 5½ weeks,” stated Richard Vitaro, Managing Director, Creo Advisors. Additionally, our survey highlights specific digital and traditional media preferences, which can be leveraged to reach customers at this stage of the season.
Supply Chain Challenges and Demand Capture Opportunities
Growing concern around the global supply chain continues to rise as we begin to feel the effects of delayed holiday goods across industries. According to our survey, inventory shortages will drive approximately 7% rotation in sales this holiday, which will be gained by those retailers with solid in-stock positions or can guide shoppers to acceptable alternatives. We anticipate there will be more than $60 B in revenue captured by those with strong inventory allocations, with other retailers likely facing bloated inventories post-holiday as stocks continue to flow. Steve Vielmetti, Managing Director at Creo Advisors, states, “Retailers and manufacturers who have taken more risk with advanced builds or have more nimble supply chains in guiding the consumer to acceptable alternatives or reacting faster to reposition orders or stock, will win this season.” Steve adds, “Beyond the holiday, companies must move toward a ‘smart supply chain’ defined by properly positioned partners and assets, along with the adoption of advanced planning tools which leverage data such as web inquiries, mobility, and other external signals to drive real-time execution and agility.”
Our survey shows that over 85% of consumers plan to go into stores for some part of their shopping journey this holiday, but they are rather tepid about the experience. Additionally, the store environment has become more complex over time with BOPIS, Curbside, Covid protocols, and numerous other factors.
Winning the Season
While many decisions have already been made, merchants still have an opportunity to drive results for the remaining ~75% of holiday sales. Optimizing digital algorithms, placing traditional advertising, driving consumer engagement and loyalty, ensuring adequate store labor, and positioning available inventory strategically will help drive stronger top and bottom line results this season. Such actions are enabled by nimble leadership, organizational coordination, agility, and analytics. Given the combination of strong consumer demand and widespread inventory and staffing challenges, retailers who do execute well this holiday will reap significant rewards. Additionally, the capabilities retailers deploy during this holiday will build organizational strength, which they can leverage into 2022 and beyond.