Holiday Sales Forecast
The news is good for small business retailers—whether you sell online, in-store, or both. The National Retail Federation (NRF) says, “Holiday spending has the potential to shatter previous records,” and forecasts holiday sales will increase between 8.5% and 10.5% percent from 2020, reaching between $843.4 billion to $859 billion.
Of those total revenues, online and other non-store sales will grow between 11% to 15%, totaling between $218.3 billion and $226.2 billion. While this forecast follows last year’s “extraordinary growth” in e-commerce, the NRF expects a big shift back to in-store shopping this year—so be ready.
The NRF also says consumers plan to spend $997.73 on gifts, holiday items, and other non-gift purchases for themselves and their families, which is slightly below the pre-pandemic high of $1,047.83 that consumers spent in 2019.
Hopefully, you’ve already experienced an early influx of holiday shoppers since many Americans worried about supply chain shortages vowed to shop early. Yet, despite the eagerness to head back to stores, 57% of consumers plan to shop online.
Check out the NRF’s Winter Holidays page for more information.
Many consumers plan to shop small this year. The NRF says 24% of holiday shoppers plan to shop at local and small businesses. And the QuickBooks Commerce Small Business Shopping Report, which studied how consumer shopping behaviors have changed since the start of the pandemic, found shoppers are even more eager to support small businesses. An overwhelming 93% say supporting small businesses this holiday season is more important than ever because of the pandemic.
Other key findings:
- 48% of consumers are more likely to try new businesses than they were pre-pandemic
- 83% of online shoppers have experienced technical issues while shopping or browsing on a small business website, which threatens sales
- Shipping is the biggest challenge for about 29% of consumers who have shopped with small businesses online, particularly high shipping costs (22%)
- 48% of the consumers stopped shopping at a store they visited before the pandemic because the company didn’t have an online store. Plus, 53% considered using a business but changed their minds because they did not have a website.
Consumers willing to spend more
This consumer support for small businesses is also underscored by research from Wells Fargo, which shows 74% of holiday shoppers (especially those age 35 and older) are willing to spend more to support a small business. Their primary reasons to shop small are:
- To support the local community (64%)
- To find more unique shopping options (40%)
- Because small businesses provide better customer service (39%)
The ongoing pandemic is impacting intended shopping behaviors. While most shoppers (55%) claim COVID-19 will not affect how they shop, 16% say they’re more likely to shop at a small business due to the pandemic. Specifically, women, shoppers aged 18-34, and the parents of children under 18 are among the most likely to say plan to shop at a small business due to the pandemic.
Check out Hope, USA, a new initiative launched by Wells Fargo and nonprofit organizations to help support small businesses.
The rise of social commerce
Influence Central just released a 2021 holiday shopping survey showing that many consumers (47%) plan to shop “mostly” online this year. Only 6% plan to only shop in-store, and 47% plan to shop both. This syncs with the QuickBooks report, revealing that 56% of those surveyed say their shopping journeys often involve online and in-person channels—omnichannel shopping.
Two subsets of e-commerce are also showing promise as shopping channels for small businesses. M-commerce (shopping on mobile devices) is still on the rise as only 3% of consumers say they won’t be doing any of their holiday shopping via their mobile phones.
And social commerce—buying products directly from social media platforms is quickly growing—45% of consumers are “open to making holiday purchases directly from within a social media platform.” Their social channels of choice:
- 77% Instagram and Facebook
- 45% Directly from a blog post
- 37% Pinterest
- 19% YouTube
- 12% TikTok
- 4% Twitch
Influence Central says consumers also turn to social media platforms to “discover holiday gift ideas” (71%), so make sure you’re actively posting on your social channels during the holidays.
Consumers are increasingly participating in “click and collect” behaviors:
- 89% will shop online and ship to home
- 35% will buy online and pick up curbside
- 34% will buy online and pick up in-store
According to the Influence Central survey, shoppers expect incentives to get them to buy—92% expect some type of discount. Specifically:
- 39% want percentage-off discounts
- 26% expect free shipping promotions
- 12% want a set dollar amount off
- 12% prefer BOGO discounts
Online shoppers have a different list of “most-wanted”:
- 95% say free shipping is essential
- 87% don’t want to make a minimum purchase to get free shipping
- 92% want free and easy returns
One critical element that helps small businesses take advantage of the anticipated holiday sales surge is to offer a stellar customer experience. Owen Frivold, EVP of Strategy and co-founder of Hero Digital, shares three key steps small businesses can take to help them better compete with big retailers this holiday season:
- Invest in personalization: Since the rise of 1st-party business-led data collection has become more attainable, there will be a great opportunity for tailoring offers and messages to each individual based on their pre and post-purchase history. The personalized customer experience should be seamless across all channels.
- Infuse hyper-localization in your messaging: With promotional activity expected to hit all-time highs this holiday season, small merchants should focus their efforts locally, so they are not overspent by larger retailers. Focused attention to local promotions will ensure that customers are led to the stores. In addition, sending timely promotions will ensure an optimal customer experience.
- Manage expectations around supply chain issues: Supply chain and fulfillment issues are top of mind for retailers and shoppers, and a poor post-purchase experience will damper any customer experience. It has affected companies of all sizes, and people have begun to understand and are shopping for the holidays sooner than ever in case they need a backup plan. Retailers should be sure to invest in revamping their post-purchase communication strategies to ensure any delay and delivery issues are addressed early. If possible, retailers should also have alternate suppliers and manage their stock within warehouses and stores to ensure accuracy in availability.
With the “official” holiday shopping season now underway, small business owners have a lot to juggle. Need help? Contact a SCORE mentor today!