While inventory and labor shortages faced by retailers and brands this year may feel like yet another short-term impact of the pandemic, it’s important to see that many of the changes we’re seeing this year are indicative of a new kind of holiday shopping season that will now be the new normal — the digital-first holiday season.
Though we are just switching the calendars over to November, the holiday shopping season is already in full swing. And there seems to be little talk of the upcoming holiday season that doesn’t invoke the impending doom of this year’s supply chain issues.
Factory and wholesale orders that were placed months and months ago by brands and retailers are not available to sell on e-commerce sites and retail store shelves, either because the factories have been impacted by pandemic-related shutdowns or their own labor shortages. And of the goods that have made it to the water, many are backed up at ports or on-board container ships waiting to be offloaded by short-staffed ports. Even air-cargo, the means of last resort for many importers, has been impacted by a shortage of passenger flights that have been used for shipping air cargo for years.
Undoubtedly many of these supply chain impacts are pandemic related, but there’s another factor to take note of here. These challenges are also the result of shoppers’ widespread adoption of e-commerce this past year. While the pandemic accelerated this move to online channels, we now see a more permanent shift in consumer behavior persisting. E-commerce sales have increased by double digits this year, and that’s on top of the already significant growth we saw last year. Consumers have grown accustomed to the convenience of online shopping, and they have no plans to revert back to old habits.
Interestingly, we now see retailers leaning into this change as a way to mitigate the challenges they are facing.
Retailers are moving up the retail calendar and encouraging customers to order early, which offers longer lead times to fulfill. In addition, they’re leveraging a key advantage most have — physical stores — to promote buy online, pick up in store options. By smoothing out demand through these strategies, they can work these orders with a short-staffed workforce more effectively and still ensure customers are satisfied. And of course, by encouraging in-store pickup, retailers also create the opportunity to drive additional purchases enhanced by the spontaneity of in-store holiday shopping.
As a result of all these changes in holiday strategy, digital has moved clearly to the front of merchandising and marketing strategies. Digital merchandising has become even more critical, and retailers are increasingly depending on their merchandising teams to push products through to their digital channels faster and more efficiently. Having streamlined, agile merchandising and marketing teams empowered by data and technology proved critical early on in the pandemic, and now, those that have invested are benefiting again in an even bigger way.
And as more shoppers become digital-first shoppers, retailers should be able to serve them even better through personalization that leverages key customer intelligence and product data — which can help them optimize and adjust holiday strategies in real time. This means more updated inventory, relevant recommendations, real-time changes to ‘bestsellers’ and more personalized customer experiences on their sites, which will not only drive better experiences, but also more sales. Retailers who have invested in customer intelligence through robust customer data platforms will benefit from this full understanding of who their shopper is and what it is they want, powering personalized marketing automation that will allow them to create relevant messaging for customers that drives conversion at scale, and more importantly, fosters brand loyalty that extends past the holidays.
Of course, that messaging represents yet another change for holiday seasons to come — Christmas is coming to your inbox that much earlier. Digital channels provide retailers with the ability to push holiday assortments online in a way that would be too obviously out of season in a physical store. A Christmas sweater may seem out of place on the shelves next to Halloween costumes, but when you get an email in October reminding you that office holiday parties are around the corner, you may be more inclined to buy that sweater a few months early. And watch out for ‘Singles Day’ on November 11 as the next major shopping holiday to drive the early holiday shopping behavior, even if for many it may be driving some self-gifting. This early marketing may seem jarring for consumers at first, but it will soon become the norm.
The impacts of the pandemic are certainly still at play this holiday season, and are going to impact business results in a meaningful, if not quite fully predictable fashion. But it’s critical that retailers don’t look at this holiday season in a vacuum. E-commerce is no longer a pandemic trend — it is a consumer preference, and its dominance as a channel will only continue to grow. The impacts this will have on staffing, on retail careers, on technology and on holiday timelines are more than pandemic by-products. These changes will become permanent fixtures in holiday seasons to come. Retailers that want to win in the long run should take note of what they learn from the holidays this year, then look to the future and start planning accordingly.