Retail shopping returned to somewhat regular operations last year as consumers emerged from COVID-19 lockdowns, but the holiday season shopping results were anything but normal. The biggest concern was the supply chain, which was stretched beyond its limit in the last months of the year. Subsequently, inflation heated up and labor became increasingly harder to find, which drove up wages. New virus variants and surges spelled uncertainty.
But Salesforce data shows a further acceleration in digital shopping adoption, cementing the stronghold that digital established over retail during 2020. In 2021, online holiday sales across November and December rose 5% year over year worldwide to $1.14 trillion and 9% in the U.S. to $257 billion. While this growth seems relatively modest, remember that it was on top of the massive growth witnessed in 2020.
There were also new, fundamental changes during the holiday shopping season that we expect will continue into 2022.
Holiday shopping’s new calendar
Last-mile shipping challenges radically shifted the 2020 holiday season’s roadmap. Then, in 2021, first-mile challenges significantly impacted the ability to move containers into ports and through the supply chain. With consumers recognizing the impact on product availability, we predicted that shopping would commence earlier than ever in the holiday season. The data confirms that, in light of inventory challenges, global early-bird shopping delivered a 16% year-over-year increase in online sales during the first week of November.
Creative store fulfillment options like BOPIS extended the holiday shipping window, resulting in significant digital growth in the last two weeks of the year.
The real change took place at the end of the season. Retailers nabbed 23% of their holiday sales during the final two weeks of the year, up 11% from the previous year, even though the shipping cutoff date had long passed by then. In fact, shopping grew by 18% worldwide during the two weeks leading up to Christmas and by 16% during Boxing Week – the biggest digital growth across the entire season. Marketers ramped up personalized messaging to shoppers by 39% in the U.S. and 43% worldwide during those two weeks in a last-gasp holiday push that paid off.
Cyber Week, by contrast, seemed to lose some oomph with shoppers. Retailer and consumer goods brands experienced a relatively soft Cyber Week, with online sales growing 2% globally. Although Cyber Week represented 23% of global online sales across November and December, it continued to lose its share of online spend for the second year in a row. Cyber Week runs from the Tuesday before Thanksgiving Day through Cyber Monday, and is traditionally considered the kickoff to the holiday shopping season.
Why such strong growth in digital so late in the season? Many consumers embraced newer fulfillment options like buy-online-pickup-in-store (BOPIS) that extended the holiday shipping window. U.S. retailers that offered BOPIS grew nearly two times faster than their non-BOPIS peers over the last two weeks of the season.
In 2022, retailers must identify and eliminate points of friction across the store by embracing digital shopping experiences. And they will be rewarded: 60% of digital orders will have some tie to brick-and-mortar locations that either help create demand or fulfill orders.
Supply chain issues played Scrooge
Limited inventory and increased prices were seen across the industry, putting immense pressure on consumers and retailers. This had the following impact throughout the holiday season:
- Fewer items: The average number of available SKUs decreased by 2% in the U.S. and worldwide, compared to a 16% increase in the U.S. and a 30% increase worldwide over the same period in 2020.
- Higher prices: Worldwide prices rose by 9% year over year. For U.S. shoppers, the sticker shock was even more eye-popping, with a 25% price increase.
- Fewer orders: Although online sales rose as a whole, the number of online orders decreased by 4% globally and was flat year over year in the U.S. Consumers also bought fewer items at checkout. This behavior isn’t surprising, as our recent survey data shows the majority of shoppers ranked inflation as their number one concern heading into the holiday season.
- Fewer discounts: Discounting was also soft in the face of unprecedented challenges. The global average discount rate during Cyber Week dropped from 26% in 2020 to 24% in 2021. The entire season saw discount rates trailing 2020 averages by two percentage points. This marks the first time retailers and brands have pulled back on discounting over the peak season.
The bottom line is consumers bought fewer items at higher prices – accentuating a battle for share of wallet and loyalty.
We expect supply chain and inflation issues to continue well into 2022. That may set the stage for a resurgence in American manufacturing or a new line of technology. But whatever does happen, this space is prime for disruption.
Credit card use declined for online purchases
The 2021 holiday season shopping results also show changes in what consumers bought and how they paid.
Popular spending categories shifted from comfort and convenience to style as consumers swapped food and household items for luxury and fashion. The three top-performing product categories in online sales growth across November and December were:
- Luxury handbags (+45%)
- Home furniture (+34%)
- General footwear (+32%)
For the first time, credit card use for online purchases declined, as consumers opted for mobile wallets and financing tools.
And for the first time, the share of online purchases made via credit card saw a decline. Instead, consumers opted for the convenience of mobile wallets like Apple Pay and financing tools like buy-now-pay-later (BNPL). Purchases made via a BNPL option increased by 29% over 2020 and represented 8% of all purchases made online, compared to 6% the previous year. Apple Pay grew 68% year over year in overall usage, doubling its share of sales from 2% to 4%.
As consumers find new favorite products and more novel ways to pay, it’s more important than ever for retailers to provide alternative payment options while continuing to smooth the checkout funnel for a frictionless experience.
Learn from holiday shopping season results
Understanding customers across all touchpoints and delivering their preferred experiences is the new baseline. As we look ahead in this new year, our expectations of consumers are clear: Digital is here to stay.
Digital has redefined how consumers shop in both the physical and online worlds. They aren’t confined by the boundaries of Cyber Week and they’re deciding when and how they browse and buy. Peak season is beginning earlier and lasting longer than ever. And while online growth will continue to normalize from the massive peaks of 2020 and early 2021, brands and retailers need to be ready to meet their shoppers whenever and wherever. They need to embrace a new retail model – one where the physical and digital realities coexist, stores never close, and shoppers are always on the hunt for the next big thing.
Powered by Commerce Cloud, the Holiday Insights Hub uncovers the true shopping story by analyzing the activity and online shopping statistics of more than 1 billion shoppers across more than 51 countries, with a focus on 12 key markets: the U.S., Canada, U.K., Germany, France, Italy, Spain, Japan, the Netherlands, Australia/New Zealand, the Asia-Pacific (excluding Japan, Australia, and New Zealand), and the Nordics. This battery of benchmarks provides a deep look into the last nine quarters and the current state of digital commerce. Several factors are applied to extrapolate macroeconomic figures for the broader retail industry, and these results are not indicative of Salesforce performance.