Retailers confident about this year’s holiday shopping season

U.S. retailers are confident about the 2021 holiday shopping season even as they recognize several key challenges, according to a new KPMG report. In the study, KPMG surveyed more than 100 executives at the largest U.S. retailers in the country. Retail executives expect holiday sales this year to represent 35 percent of their company’s 2021 annual sales on average. KPMG expects that holiday sales will show strong growth at 7 percent year over year, nearly double the retail industry’s historical annual sales growth of about 3–4 percent. Online shopping will continue to accelerate: Retailers predict e-commerce will surpass the record 2020 levels by 35 percent this holiday season.

Yet 82 percent of the retail executives acknowledge that they are either somewhat or very concerned about inventory shortages. To prepare for the unexpected, retailers plan to invest more heavily in safety stock (59 percent) and use alternate suppliers (55 percent).

Retailers also think prices may increase as much as 15 percent year over year, and they have more holiday promotions planned, beyond price promotions, to boost holiday sales. More than two-thirds (68 percent) believe this year will be either somewhat or much more promotional than last year. Over half say they will stay open on Thanksgiving, and most plan on launching Black Friday, Cyber Monday and loyalty program promotions.

“Retailers are bullish on the holiday season, showing confidence in their digital commerce improvements and the ability to fend off inflationary and supply chain risks,” says Matt Kramer, National Sector Leader, Consumer and Retail, KPMG U.S.

To help retailers prepare for potential challenges, KPMG identifies five steps that retailers can take now:

Think strategically about holiday promotions. Retailers can navigate inflation’s impact on supply and demand by taking a strategic approach to revenue growth. Using analytics to make pricing decisions can increase revenue while limiting the impact on margins.
Double down on digital. New delivery models such as click and collect, curbside pickup and ship from store are here to stay. Optimize an omnichannel approach to meet consumers where, when and how they want to shop while monitoring profitability. Retailers can increase market share by demonstrating exceptional customer experience across each channel.
Encourage shoppers to start early. Retailers can use digital marketing, promotional events and social media to their advantage, focusing on loyalty and rewarding their most important customers who start shopping early. Encouraging shoppers to start earlier in the season will help counter last-minute rush and supply chain bottlenecks.
Prioritize health and safety measures. With Delta variant concerns rising, retailers are wise to review and adjust health and safety measures to accommodate the holiday season. Being diligent about high safety standards will help protect staff and customers and help make in-store experiences more comfortable.
Exercise agility and adaptability. Due to ongoing pandemic uncertainty, maintaining flexibility and being ready to pivot operations is key. Shifting consumer shopping behavior may require retailers to scale down in-store staff, while quickly ramping up digital and supply chain resources.