What has historically been the biggest shopping weekend of the year became a more prolonged period of holiday activity.
As soon as the retail industry wrapped up discussions on back-to-school shopping, our attention quickly jumped to the uncertainty of the holidays ahead. With ongoing COVID impacts, supply chain issues, labor shortages and inflation, expectations around Black Friday Cyber Monday weekend felt ambiguous.
How would the typical sales season change because of these challenges? Would consumers continue to shop online or would they show up for in-store browsing? Would small businesses see growth, or would they too experience the effects of supply chain and hiring troubles? And to what extent might another COVID wave change holiday gathering plans and affect shopping behaviors?
With BFCM behind us, we’re taking a look at how it all played out last month. Let’s review the 2021 cyber week shopping trends, and what these dynamics mean for businesses exiting the holidays and heading into a new year.
Preseason shoppers saw less substantial promotions
This year, many consumers started shopping preseason, taking advantage of early sales and trying to get ahead of shipping delays and supply issues. Deloitte found that 70% of consumers said they started shopping before the end of October 2021, compared to 66% last year and 61% in 2019. When indicating their motivation for earlier-than-usual holiday purchases, 70% of those shoppers cited “avoiding stockouts” as their primary motivation (versus 55% last year).
“Consumers are starting earlier than ever to be sure they can get what they want, when they want it, at a price they want to pay,” said Matthew Shay, NRF President and CEO, the week before Thanksgiving. “Black Friday stopped being a one-day event years ago, and this year some consumers started shopping for Christmas as early as Halloween.”
With inflation and supply chain issues a concern across the industry, retailers kicked it into high gear to start holiday promotions early. There was a perceived benefit to this: when retailers started deals and discounts ahead of BFCM, they could better keep track of inventory, take extra care of fluctuating health and safety precautions, and improve the customer day-of-shopping experience.
Although consumers and promotions both started earlier than ever, promotional activity was pretty tame due to supply-chain-related product shortages. When surveyed, early holiday shoppers say they experienced discounts at either similar levels (54%) or less often (37%) than last year; only 9% of early holiday shoppers saw higher promotional activity compared to the year prior. With fewer promotions in mind, and considering the impact of inflation, too, the average retail sales price in the U.S. was up 22% compared to the same period last year (November 23 to 25).
According to Wedbush analysts Tom Nikic and Ezra Weener, “While Black Friday has long been a ‘race to the bottom’ in terms of pricing, this year seems to have bucked the trend. Consumer demand is very strong, inventory is extremely lean right now, and the industry is lapping perhaps the most challenging holiday season in history.”
Online sales slowed while curbside and BNPL services picked up
eCommerce has grown exponentially over the last few years, but how did digital sales fare over the BFCM weekend?
Online, retailers rang up $8.9 billion in sales on Black Friday, down from the record of about $9 billion spent on the Friday after Thanksgiving in 2020, according to data from Adobe Analytics. For the first time ever, Cyber Monday failed to live up to its usual hype, with sales dropping 1.4% YoY, according to retail intelligence platform EDITED.
Curbside pickups were still popular this shopping season, showing the value of brick-and-mortar stores. Curbside pickup was used in 18% of all online orders on Cyber Monday (for retailers that offer the service), versus 20% last year. On Black Friday 2020, curbside and in-store pickup orders increased 52% over 2019, while retailers that offered curbside pickup saw increased online sales at 19% over those that did not. Alongside curbside pickup, “buy now, pay later” (BNPL) services saw an increase on Cyber Monday, with revenue up 21% YoY and orders up 1% YoY.
In-store foot traffic rose, but not in typical BFCM fashion
More people have returned to shopping in-store throughout 2021, but not many shoppers turned up for Black Friday.
In-store shopping at several food and consumable retail chains on “Turkey Wednesday” was up considerably from last year. For example, Target’s brick-and-mortar visits on the day before Thanksgiving were 22.1% higher than in 2020 and 14% more than in 2019, and Walmart’s traffic was up 23.2% over 2020 and 3.1% over 2019.
Among those shopping on Thanksgiving Day, 65% were likely to do so in stores, up from 50% last year. On Black Friday, 64% were likely to shop in stores, up from 51% last year. Traffic at retail stores on Black Friday dropped 28.3% compared with 2019 levels, as consumers shifted more of their spending online and started shopping earlier. Traffic was up 47.5% compared with year-ago levels.
This time in 2020, many shoppers were staying close to home due to the pandemic. Prompted by both retailer efforts and changing consumer behavior, Black Friday brick-and-mortar traffic was down 52% in 2020 compared to 2019.
Small businesses find growth thanks to local shoppers
Many people have turned to shopping locally to avoid supply chain delays, and many small businesses have been facing large demand as they gear up for the holiday season. On Small Business Saturday, total projected spending at independent retailers and restaurants soared above pre-pandemic levels to $23.3 billion, and 51 million consumers shopped in-store on that day.
Shopify also saw a record-setting Black Friday, with sales of nearly $2.9 billion. This represents a 21% increase over Black Friday in 2020, when sales by Shopify merchants surged 75% over 2019 driven by COVID-19 lockdowns. In 2020, Shopify saw a 50% increase from 2019 in global consumers purchasing from independent and DTC brands on Shopify.
Retailers continue to face supply chain delays, so we can expect consumers to shop locally and in-store throughout the rest of the year. This will also lead to a rise in buy online, pick-up in store (BOPIS) options, as well as curbside pickup.
While no one can know for sure what this time next year will look like, we can only assume that BFCM deals will again start “early.” This underscores the importance of optimizing your pricing and promotional strategies throughout the year, and putting your “holiday” hat back on not long after Q1 2022 is over.
On the topic of supply chain shortages, we have another blog that may help with 2022 pricing execution. Check that out here.