The 2021 holiday shopping season was a qualified success – all things considered.

Consumers entered the season amid uncertainty. Would Covid-19 spike again? And yes, it did – later in the season. How bad would the supply chain crisis get? It was a problem – holiday inventory shrank 2 percent because of shortages – but it was not a big problem for the big-box retailers who possessed the resources to plan ahead. Would inflation hurt spending? Yes, rising inflation played a role, especially in December.

The good news is that overall, U.S. holiday sales overall rose 8.5 percent according to Mastercard SpendingPulse. Online spending in the United States rose 8.9 percent in the United States, according to Salesforce. The bad news is that in both cases, the growth rates were lower than expected. MasterCard had predicted an 8.8 percent increase. Salesforce had predicted a 10 percent increase. But keep in mind that no one was predicting inflation to spike, and inflation definitely hurt sales as December wore on.

What do spending patterns in 2021 say about how advertisers might approach 2022 seasonal campaigns?

1. Getting a head start is more important ever. Everyone should brace themselves for the launch of seasonal campaigns even earlier. That means Memorial Day campaigns starting sooner. Fourth of July, Back to School, Christmas 2022 – all sooner. That’s because the supply chain crisis is casting a permanent shadow over retail for the year and possibly beyond. During the 2021 holiday shopping season, retailers were launching holiday promotions in September to get out in front of the possibility of shortages hurting inventory availability. By Thanksgiving, 30 percent of consumers had made their holiday purchases, according to Salesforce. Even though the supply chain crisis proved to be less disruptive than many had feared, few retailers lack the scale and resources that the big box retailers possess to offset the effects of inventory shortages. In addition, retailers learned a lesson about the value of getting an earlier start, and now they are all feeling the pressure to get a jump on the seasonal sales before a competitor does. With uncertainty continuing, retailers will to advertise sooner.

2. Big-tent events may have less impact. A byproduct of launching campaigns earlier is that they can dilute the actual impact of an event-oriented sale (Memorial Day, July 4, Labor Day, etc.) In 2021, Black Friday and Cyber Monday sales were subdued. But muted sales were only a problem for businesses that defined Black Friday or Cyber Monday as a single-day event. In fact, for the past few years, big retailers have been redefining Black Friday in particular as a series of events throughout the month of November. As a result, they may have expereinced strong “Black Friday sales” over a period of days, while sales from the actual Black Friday may not have been as strong. This is all OK. It just means that retailers need to adapt to changing shopping patterns and more creatively combine day-of sales with smaller flash sales that occur near the day-of sale.

3. Adaptability is essential. Advertisers should be ready for the unexpected. For example, typically as December 25 approaches, we see a slowdown in online retail sales as consumers avoid taking the risk of buying a gift and missing the cutoff day for having a gift arrive by Christmas Day. But according to Salesforce, “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.” Why? Likely because the surge in Covid-19 with the Omicron variant made shoppers more cautious about buying in-store. Interestingly, Salesforce reported a surge in buy online, pick up in store shopping during this period, which suggests that however they shopped, people just wanted to stay away from browsing in a store. Flexibility also means being adapting to different shopping formats online. Salesforce said that over the 2021 holiday season, 4 percent of global digital sales on a mobile device were made through a social media app; and 10 percent of mobile traffic originated from consumers browsing through social networks. Social commerce will be an increasingly part of the advertising and marketing mix in 2022 especially for any business whose customer base is composed of Gen Zers and Millennials.

4. Promoting flexible financing options is important. With inflation worsening, consumers are looking for ways to ease the strain on their budgets, but they may be leery of racking up big credit card bills. These are reasons why, according to Salesforce, “Buy Now, Pay Later (BNPL) services in the U.S. during the holiday season increased 40% compared to 2020. Consumers turned to these offerings throughout the holiday season to offset the higher price tags. Alternative payment forms, including PayPal, Apple Pay, and Google Pay, also increased by 15% YoY in the U.S.” In fact, the rise of BNPL is one of the hottest topics in retail now. Retailers should make BNPL an important part of their advertising strategies for 2022.

In 2022, advertising will be an adventurous industry with so many fascinating formats arising and trends coalescing around changing consumer behavior. One thing is clear: wise businesses are going to advertise, both during lean times, prosperous times, and uncertain times. We’ve learned time and again that scaling back because of uncertainty is always a bad strategy, as we have discussed on our blog here and here. Get ready for an exciting ride!

Contact True Interactive

At True Interactive, we’ve helped a number of businesses develop and execute seasonal holiday campaigns. Contact us to learn how we can help you.

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