Resilient Customer Demand to Save Holiday Shopping Season
Inflation, energy prices and the risk of recession will not play Grinch this holiday shopping season, which is expected to surpass a record spend in 2021. To make the most of robust consumer demand, retailers need accurate data to bridge online and physical channels and reduce costly friction points at brick-and-mortar stores.
‘Tis the season...to break records
Winter holiday retail sales in 2022 are forecast to range between $942.6 billion and $960.4 billion, 6% and 8%, respectively, higher than the $889.3 billion in 2021 sales, according to the Washington, DC-based National Retail Federation (NRF). The group predicts spending this holiday season, which stretches from 1 November to 31 December, will be supplemented by savings and credit.
“NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity,” Jack Kleinhenz, NRF’s Chief Economist, said of a 2022 shopping season that “is anything but typical.”
The NRF report also highlights an important trend in 2022: Early bargains. Inventory buildups for retailers of all categories have made headlines recently, prompting some observers to question whether seasonal shopping events, such as Black Friday and Cyber Monday, mean much in a year when retailers are offering deep discounts in October.
Bringing the bargain season forward may also explain a drop in the hiring of seasonal workers, which is forecast to drop to between 450,000 and 600,000 from 669,800 NRF in 2021. “Some of this hiring may have been pulled into October as many retailers are eager to supplement their workforces to meet increased consumer demand,” the NRF said.
Channeling success
E-commerce sales should increase between 10% and 12% over $238.9 billion in 2021 to between $262.8 billion and $267.6 billion this holiday season, according to the NRF report. As might be expected, considering winter holiday shopping has a strong experiential component that is very much intertwined with the rituals of the season, in-store sales are also expected to grow between 7.3% and 6.3% compared with the $650.4 billion of in-store sales in 2021.
The NRF survey of locations for holiday shopping demonstrates the intent to increase in-store purchases at different types of retail stores. But brick-and-mortar performance in the winter holiday season depends significantly on weather conditions, a variable that is difficult to predict.
The Ghost of Retail’s Future
Charles Dicken’s A Christmas Carol is regularly adapted to fit the spirit of an era (Bill Murray’s Frank Cross character embodying the excesses of a film executive in the 1980s, for example). If modern retailers were visited by the ghost of retail’s future, many would likely be admonished for waiting to embrace behavioral analytics more fully.
Cultivating deep insights into consumer behaviors across multiple sales channels is the key to success for hybrid retailers. Once considered out of reach because of cost or capacity, the new generation of tech solutions allows retailers to leverage in-store analytics to create a more complete picture of customers and their preferences.
Integrating data captured from digital and physical channels to improve store layouts, manage staff allocation, and cut losses related to excessive queuing is part of a digitalization trend that is gaining momentum in the retail industry. Part of that is linked to ensuring automated processes, already a fixture of the in-store experience, have the data necessary function properly. The other part is focused squarely on improving the customer experience, the best gift a retailer can offer—during the holiday or any other season.
Tags: | retail | shopping | brick-and-mortar | holiday shopping | customer demand
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