Holiday Sales Seen Jumping 9% vs. 2020, Led by Apparel: EMarketer

Predicting a “huge” holiday sales season, eMarketer analyst Andrew Lipsman said on a Tuesday webinar that 2021 will be the second trillion-dollar holiday season in total retail spending, with a 9% growth rate to $1.147 trillion for November and December. Sales will be driven by “post-vaccine optimism,” with 70% of the population being fully vaccinated, leading to the top-gaining holiday retail sales season in over 20 years, he said.

Caveats remain, though, including lingering concerns about the COVID-10 delta variant, a spending shift to travel after pandemic stay-at-home trends, higher prices due to inflation, and out-of-stock and supply-chain concerns, Lipsman said.

Despite the nearly double-digit expected growth rate, projections could have been higher. “What purchases don’t happen because you’re understaffed?” said Lipsman, commenting on the labor shortage. He spotlighted higher value consumer electronics and furniture purchases that require more on-floor sales support. “It’s certainly possible that some of those purchases do get left on the table,” said the analyst, saying some planned purchases won’t be made. “If everything was firing on all cylinders, we could be well into double-digit growth this year,” he said.

Electronics will be supplanted as the top growth category this season by apparel, which took a hit during the height of the pandemic, Lipsman said. He cited a “revenge shopping trend" that's expected to result in 26% growth to $46 billion. Computers and CE have been strong throughout the pandemic and will have 12% growth over the season, in second place. Sales will be spurred on by some “hero” products, especially from Apple. Of the top Amazon search terms Jan. 1-July 29, six were Apple devices, led by iPhone, he said.

Brick-and-mortar will rebound in 2021, jumping nearly 8% vs. a typical growth year of 2%-3%, to more than 80% of total retail spending, Lipsman said. Stores will generate more than 70% of retail growth November-December. E-commerce will top $200 billion in spending for the first time, Lipsman said, doubling the 2017 outlay, to 18.4% of total retail. E-commerce growth will moderate to a more normal 14.4% after spiking 32% in 2020. Mobile commerce will be just under half of all e-commerce spending this year, 8.5% of total retail sales and over 16% of total growth.

Though there was discussion of earlier shopping in recent years, Lipsman said evidence doesn’t support that historically, with last year an outlier due to Amazon’s placement of Prime Day in October. This year, 31% planned to begin shopping in October; 24% expected to begin before Thanksgiving. “We don’t see the procrastination that we’ve seen in normal years,” he said.

Amazon, Best Buy, Walmart and Target tried to jump-start holiday shopping with various events this month. At the end of October, Amazon will reveal its lineup of Fire TVs, Lipsman said, calling the reveal “Amazon’s version of a doorbuster deal.”

On whether early promotions pull spending from the Cyber Five Thanksgiving through Cyber Monday period, Lipsman said in 2017-2019 those days became increasingly important relative to the season, peaking in 2019 at 20% of the total season spend. In 2020, shopping was pulled into October and early November and did “take some of the wind out of the sails” of the Cyber Five days, which dropped to 18.4% of spending. The five days are projected to generate 18.5% of the season’s receipts this year.

Thanksgiving has become the third biggest e-commerce day of the season and is seen passing $6 billion this year, riding a 21% growth rate, Lipsman said. It will be the top growth day of the Cyber Five as more stores are closed for the holiday, which will steer consumers to online shopping, he said. Black Friday e-commerce sales are forecast to grow 16% to over $10 billion, a high-water mark. Saturday and Sunday will post about $5 billion each, with Cyber Monday predicted to be the highest online shopping day in history at over $12 billion, a 12.4% growth rate.

Shipping capacity “is definitely a concern,” Lipsman said, but not enough to derail the season. Last year’s concerns were minimized by logistics companies and carriers adjusting to the demand need by raising prices and pulling demand forward. On-time delivery rates for the Cyber Five and Christmas week were in the mid-90% range. This year, demand will outstrip supply by a smaller margin, he said.

Gift cards will be popular due to out-of-stock items that are expected to be higher as a result of supply chain constraints, Lipsman said. People who don’t get what they want will get gift cards instead rather than not get an item at all, he said. Brands and retailers should be preparing for backup items that are close to out-of-stocks, he said. Some inventory will come in late, extending the season, he said. Click-and-collect will spike late in the season, peaking at 32% of e-commerce orders mid-December vs. a mid-teen percentage for the early part of the season, he said.