Following the holiday shopping season, retailers have little time to take a breath before they must begin planning for the next year. Before starting such planning, however, they would do well to reflect on how things changed during the 2021 holiday shopping season. There was good news. Jan Kniffen (@JRogersK), CEO of J. Rogers Kniffen World Wide Enterprises, told CNBC, despite all of the challenges facing retailers this year, “[2021 witnessed] maybe the best holiday selling ever; but, certainly in the last seventeen years.” As I understand his statement, he is applauding retailers’ selling efforts in the midst of a pandemic, inventory shortages, and rising inflation. Job well done.
On the consumer side, correspondent Jessica Dickler (@jdickler) reports, “More Americans got into the spirit this holiday, even if it meant spending more than they could afford. Between buying presents, plane tickets and party supplies, 36% of consumers went into debt, owing an average of $1,249, according to a survey by LendingTree. Most holiday borrowers with debt put it on their credit cards, although for the first time, nearly 40% of Americans used so-called buy now, pay later financing to spread out their expenses, the report found, which polled more than 2,000 adults from Dec. 14 to Dec. 20.” In other words, retailers’ great selling efforts could have downstream consequences for consumers and future sales.
2021 Holiday Retail Trends
Worker Shortages Grew. Between rising infection rates (thanks to the omicron variant of COVID-19) and the “Great Resignation,” retailers faced significant worker shortages this past holiday season. Retailer journalist Ben Unglesbee (@Ben_Unglesbee) reports, “Seasonal retail jobs dropped 7% from October through December, according to Challenger’s analysis of Bureau of Labor Statistics data. The drop was the largest since 2016, when hiring fell nearly 9.6%. Transportation and warehousing jobs also fell — but very slightly (less than 1%) — after last year’s 67.4% growth, according to Challenger.” He adds, “Retailers complained of worker shortages well before the industry headed into a holiday season.”
Fulfillment Options Proliferated. Other major concerns this past holiday season were getting products in time for the holidays and then getting them into the hands of customers. Logjams characterized supply chain woes leading up to the holidays, which resulted in many products ending up stuck on ships or in ports waiting to be offloaded. When products were available, getting them into the hands of consumers was next challenge retailers had to overcome. Staff members from Retail Dive report, “Retailers relied on fulfillment services like curbside pickup and same-day delivery to get their products into customer’s hands safely and encouraged early holiday shopping to combat supply chain challenges.” As with the year before, delivery services were overwhelmed and additional surcharges resurfaced.
Online Sales Increased. Not unexpectedly, journalist E. Justin Swanson (@ejsnyt) reports, “E-commerce sales (during the 2021 holiday shopping season) were up 11 percent. Compared with 2019, before the pandemic brought about an explosion of online ordering, e-commerce sales jumped over 61 percent. Online sales made up 20.9 percent of all retail sales this year, according to the Mastercard report. In 2019, online sales accounted for just 14.6 percent of all retail sales, underscoring how the pandemic has accelerated the shift to e-commerce.”
Returned Merchandise Challenge Exploded. For years, retailers have witnessed more merchandise being returned from online sales than from in-store sales. Therefore, it should come as no surprise that, with an increase in e-commerce, challenges associated with merchandise also grew. Retail journalist Tatiana Walk-Morris (@Tati_WM) reports that a survey conducted by RetailMeNot found, “38% [of holiday shoppers are] planning to return gifts this year.” She adds, “RetailMeNot isn’t the only one pointing to a possible spike in returns following the increase in sales. A report from CBRE and Optoro predicts that shoppers could return $66.7 billion in merchandise this year, up 45.6% over the past five-year average. Returns are a complicated issue for retailers, as generous returns policies have to some extent become expected. At the same time, returns processes can harm a retailer’s financials and the environment, with retailers often liquidating or getting rid of the unwanted items.”
Early Shopping was Encouraged. Faced with supply chain snarls and predictions of empty store shelves, many retailers began encouraging consumers to buy early and buy what was on-hand. Many retailers encouraged holiday shopping as early as the beginning of October. The question remains: Is this a permanent shift in what marks the holiday season? The Retail Dive staff observes, “The uncertainty of the pandemic pushed retailers to think differently about the holiday season in 2020. That year Amazon set its Prime Day in October, unofficially marking the beginning of holiday sales, as retailers anticipated a bump in e-commerce sales. Similarly, 2021 saw retailers push for consumers to start shopping early, especially due to ever-looming supply chain complications. And consumers listened, with many anticipating that their desired products may not be available if they waited too long.” A longer shopping season coupled with fewer offered deals are good trends for retailers — and the results from the past couple of years may encourage retailers to continue those trends for the next couple of years. There was one downside to the early shopping trend, a significant drop-off of consumer spending in December. Economic journalist Gabe Rubin (@Rubinations) reports, “U.S. retail spending and manufacturing slowed at the end of 2021 as the Covid-19 Omicron variant and inflation surged, early signs the latest complications from the pandemic could be weighing on the economy. Sales at retail stores, online and restaurants dropped by 1.9%, damping the end of the holiday shopping season.”
Early Ordering of Inventory Made a Difference. Retail stores that ordered early and beat supply chain snarls were rewarded. Retail buyers have always tried to stay ahead of the game; however, they have several factors with which they must contend. First, what’s going to be a hot item come November and December? Often, trends don’t show themselves until late summer or early fall, which means ordering too soon can mean store shelves are stocked with the wrong items. Second, will the supply chain recover from its current woes? There are no guarantees, which means waiting to order risks the possibility of empty shelves during the critical holiday season. Finally, what will the economy look like next year? The Retail Dive staff explains, “Even with many players ordering inventory season early for the season, stockout notifications reached triple digit growth [in 2021] compared to pre-pandemic levels. As shipping costs skyrocketed and companies shelled for air freight, retailers raised their prices. Online prices in November rose 3.5% year over year, marking the 18th straight month of year-over-year inflation and an all time record increase since Adobe’s Digital Price Index has kept track.” There are no easy answers for retailers; however, one truth exists, you can’t sell won’t you don’t have.
The Retail Dive staff concludes, “Thanks to the pandemic, the holiday shopping season may never be the same. But despite restrictions, retailers have found a way to create new shopping experiences in the virtual world.” As noted above, however, increased online sales mean increased returns as well. Journalists Michael Simoncic and Alfredo Lozano assert that merchandise returns can be both a curse and blessing. They explain, “By making the return process painless, transparent, and visible, retailers can remove ‘return anxiety’ from the customer’s shopping experience — and from their own. To do this successfully, companies can take proactive steps to prevent and reduce the need for returns by strategizing around creating frictionless, convenient, easy returns.” In fact, they insist, “Retailers can design returns to be a strategy for growth.”
It’s too early to say whether the changes retailers have witnessed the past two years will be permanent. Nevertheless, some trends are a pretty sure bet. Omnichannel operations, for example, will continue to hold pride of place even after the pandemic fades into the past. Increased e-commerce is also a sure bet, which means retailers will have master both fulfillment and returns processes. Increased e-commerce doesn’t mean physical retail is dead. In fact, consumers, tired of being in lockdown, have demonstrated a desire to hit the stores whenever they feel it’s safe to do so. In the meantime, order online, pickup in-store options are likely to remain very popular.
 Jessica Dickler, “More Americans took on holiday debt this season, owing an average $1,249,” CNBC, 29 December 2021.
 Ben Unglesbee, “Holiday hiring in retail dropped 7%,” Retail Dive, 12 January 2022.
 Cara Salpini, Ben Unglesbee, Kaarin Vembar, Daphne Howland, Caroline Jansen, and Maria Monteros, “Holiday rewind: How the shopping experience changed in 2021,” 10 January 2022.
 E. Justin Swanson, “Holiday sales soared, with e-commerce notching huge gains, a report says.” The New York Times, 26 December 2021.
 Tatiana Walk-Morris, “Report: Over a third of shoppers plan to return a gift this season,” Retail Dive, 5 January 2022.
 Gabe Rubin, “U.S. Retail Spending, Manufacturing Drop as Omicron and Inflation Surge,” The Wall Street Journal, 14 January 2022.
 Michael Simoncic and Alfredo Lozano, “Returns are the new growth strategy,” Retail Dive, 23 December 2021.