Consumers Now Expect Holiday Shopping to Start in October: EMarketer

The COVID-19 pandemic triggered a “fundamentally new holiday season calendar,” said eMarketer analyst Andrew Lipsman on a Thursday holiday season retail webinar. As part of the holiday sales season's shift further into Q3, Lipsman predicted Amazon will make an October Prime Day event -- held in 2020 but not 2021 -- an annual occasion, while keeping the summer Prime Day event.

Reviewing retailers' evolving holiday season promotional strategies, Lipsman noted tentpole sales events emerged around Thanksgiving to solve a “coordination problem” between retailers and consumers. Consumers tend to bundle shopping in trips, but if every retailer is offering a different promotion at a different time, “it really complicates things for consumers.” Black Friday solved the coordination problem and became a “huge boon to retailers,” he said, and Cyber Monday followed.

When some retailers began opening doors early on Thanksgiving Day, as an early start to Black Friday sales, others followed, but early openings had “the opposite of their intended effect,” Lipsman said. “Instead of getting two days of promotional benefits, Thanksgiving ended up bringing out the best Black Friday shoppers early but only for a limited period of time,” and then they didn’t return to stores on Friday, he said. The result was a “worse overall performance for retailers on those two days than had they just stuck to only doing Black Friday.”

The rise of e-commerce gave rise to Cyber Five events from Thanksgiving through Cyber Monday. Retailers could focus their marketing budgets on Cyber Five events or start promotions early, but early one-off promotions typically had little effect because consumers weren’t primed to shop the non-tentpole days, Lipsman said.

The pandemic “changed absolutely everything,” giving retailers an excuse to close stores on Thanksgiving, said Lipsman, predicting store closures will stick. The disruption helped retailers “re-coordinate around the better scenario for them” and to create a “true early holiday shopping season that didn’t previously exist." Consumers’ awareness of product shortages during the pandemic shifted buying behavior to an “always-on, online shopping environment.” When Prime Day hit in October 2020, other retailers followed suit, and “boom, all of a sudden we had a new early-season holiday tentpole,” he said

Retailers are now coordinating on early shopping promotions because consumers expect them, Lipsman said. “Now that we have two years of this early shopping behavior established, it’s really becoming ingrained, and it’s very likely to carry forward,” with the holiday season starting earlier, running longer and having “two distinct tentpoles” starting with October, he said. A 2021 eMarketer survey showed 28% of consumers began shopping in early November and 28% in October or earlier.

On the “massive” 2021 holiday season -- recording a 16% year-on-year increase in spending to $1.2 trillion -- Lipsman said supply chain-driven out-of-stocks were “not as bad as the headlines suggested and anticipated.” In the 2020 holiday season, out-of-stock messages for online shopping were up 3.7 times vs. 4 times in 2021, he said. While "elevated," out-of-stock levels weren't that much different from 2020, he said.

Discounting was much lower in holiday season 2021, at 9% vs. 14% in 2020, Lipsman noted. Computers and electronics, “some of the hardest hit by supply chain cost increases,” weren’t discounted “nearly as aggressively.” Computers averaged 10% discounts vs. 22% in 2020; electronics were discounted 8% vs. 21% in 2020, he noted.

E-commerce grew at its lowest holiday season rate on record, 10%, in 2021, Lipsman said, saying rates have typically been in the mid-teens. E-commerce had a tough compare against a COVID-19-driven 2020 growth rate of 32%. In-store shopping thrived in the 2021 season, growing 17% vs. 2% in 2020: “We’ve never seen anything like that,” said Lipsman, noting consumers had money to spend and were “really ready to get back out into stores.” The trend won’t persist, he said, saying in-store shopping will return to modest growth levels.

Cyber days sales in 2021 were “way below” eMarketer’s expectations of double-digit growth, said Lipsman. Though Cyber Monday had an all-time high of $10.9 billion, sales were up just one point, and Black Friday receipts inched 0.3% higher at $9 billion. Thanksgiving Day sales grew 2.3% to $5.2 billion. EMarketer predicts the Cyber Five’s share of holiday sales will slide to 16.4% from 16.9% last year and 20% in 2019.

Consumer electronics and computers were second behind apparel in e-commerce sales growth, at 11.5%, led by Apple’s iPhone, Mac and AirPod, gaming consoles, smart TVs and smart home electronics, Lipsman said. From November to December, Amazon had a 3% increase in unique visitors year on year to 223.5 million, vs. Walmart with 139.3 million (up 3%), Target at 83.7 million (minus 3%), Apple at 79.7 million (down 5%) and Best Buy at 57.2 million (down 10%).

For holiday 2022, eMarketer forecasts total retail holiday season sales will rise 3.3% to $1.26 trillion. E-commerce sales will return to more typical growth levels at 15.5% to $235.9 billion, for 18.7% market share, after a share decline in 2021. Brick-and-mortar sales will “come back down to earth,” growing 0.9% to $1 trillion, and mobile commerce, driving 9.3% of retail sales, will see 58% growth to $116.9 billion, he said.

Connected TV is a “big opportunity” for retailers, said Lipsman. He cited a Q3 Xandr survey of ad agency and marketing professionals outlining the benefits of buying CTV inventory programmatically, led by easier campaign targeting and optimization, better pricing, ability to achieve scale and reach, and ability to activate one campaign over multiple sellers. Amazon’s exclusive deal for NFL Thursday Night Football this fall will “awaken brands to the power of CTV,” he said. Walmart’s partnership with The Trade Desk will enable closed-loop marketing, he said.

On 2022 holiday season shopping trends, Lipsman said buy now, pay later users will grow 31.4% vs. 2021, adding 14.2 million U.S. users. Lipsman cited a Bizrate Insights report saying 9% of in-store shoppers used BNPL in February, up from 6% a year ago.

Three hyped trends brands shouldn’t overinvest in for the 2022 holiday season are livestreaming, augmented reality and metaverse retail, Lipsman said, saying companies should “proceed with caution." U.S. consumers “aren’t quite there yet,” he said of livestreaming commerce, a big trend in China but not deeply ingrained with U.S. consumers.

Lipsman showed a photo of an Instant Pot superimposed on a shopper’s countertop to show how it would look in the home as an example of AR that doesn’t offer much benefit. Makeup is a better use case for AR, but it’s “not pervasive” at this point, he said. Metaverse retailing has potential to do “interesting things,” Lipsman said, "but I think it’s well into the future. I can’t see exactly how this manifests in a big enough way to move the needle for the vast majority of brands.”