It’s easy to cover the holiday shopping aftermath but arguably more important to explore what retailers are thinking in advance of the holiday season. Seventy retailers weighed in via Digital Commerce 360’s pre-holiday survey (July to September) on what’s on the horizon for the holidays.

The positive news is that six in 10 retailers expect their holiday revenue to increase relative to 2021. The expected gains can be summarized as follows:

• Up 25%+: 19%
• Up 1-24%: 41%
• Flat: 20%
• Down: 20%

It’s essential to gauge the retailer point of view on what shoppers think as it influences potential strategies. Retailers believe shoppers have a keen eye on spending, with 63% feeling inflation will cause consumers to buy less. 53% think these customers will comparison shop more and convert less, making it critical for retailers to get it right the first time. A quarter of retailers say shoppers will concentrate on buying with Amazon more while 21% will buy more on marketplaces.

From a product standpoint, it’s good to see that 24% of shoppers will buy based on retailer values (24%) while 11% will seek out experiences vs. products.

Inventory is at the center of other important issues. Half of the retailers believe shoppers will buy earlier to avoid out-of-stock merchandise and 34% think shoppers will find products out-of-stock more than in past seasons. Unfortunately, only 13% suggest these shoppers will convert more frequently, given a fear of out-of-stocks. There’s also a sense among one in three respondents that high inventories may mean more promotions. They don’t believe that Prime Day timing early shopping will significantly impact the holiday shopping season (7%).

Logistically speaking, 36% of retailers think shoppers will demand even faster shipping, while 19% of retailers say shoppers will use same-day delivery more. Only 13% of retailers expect BOPIS and curbside to decline this year in a post-COVID holiday season.

Obstacles abound this holiday season

Retailers face increasing costs and rising inflation and are concerned about consumer confidence. The principal focus is on profitability, as retailers cite increasing costs (59%), rising inflation rates (56%), meeting profitability goals (43%) and managing marketing budgets (36%) as the main obstacles.
Along with profitability comes a series of issues that could impact performance including:

• Fluctuating consumer confidence: 44%
• Forecasting growth: 29%
• Growing marketplace business: 29%
• Amazon competition: 26%
• Online platforms changing privacy policies: 21%

Inventory will be an important part of the equation, with 36% of retailers citing managing inventory levels and 30% saying refining product assortments is an obstacle they must overcome.

Systems/capabilities always require attention and results revealed that 21% will be updating technology systems and 19% are looking to improve omnichannel capabilities.

Given the consumer focus on logistics, timely delivery remains on the minds of 26% of those surveyed, while 19% will look to enhance their fulfillment efforts.

To adapt to the current economic climate, retailers focus on managing costs, inventory and prices while ensuring customer service remains strong.

Looking specifically at inventory, most retailers believe they are in a good inventory position. Notably, 27% believe they have ample inventory but not in the right places, while 21% know that the supply chain will play a role in their ultimate inventory position over the holidays.

Fundamentals from onsite search, an improved checkout page, product information and critical page upgrades will be crucial for improving holiday business. Retailers realize that shoppers expect to find products fast, which retailers facilitate using onsite search and navigation. Onsite search and navigation are cited as No. 1 when it comes to improving one’s holiday business for 67% of retailers. Half of the retailers noted that having an improved checkout experience (54%), better product information, size guides (52%) and making upgrades to key pages, including home and product pages, will drive holiday sales.

The supply chain remains an issue, however, retailers will not likely know its impact until the end of the season. Retailers proactively optimize inventory by increasing orders, making contingency plans and working with vendors to minimize disruptions. From an orders perspective, retailer action will be as follows:

• More from existing suppliers: 46%
• Ordering from new suppliers: 29%
• Increasing orders overall: 23%
• Increasing orders from more countries: 16%

Making plans to meet their needs includes contingency plans (40%), alternative manufacturing plans (21%) and finding an increasing number of carriers (19%). This activity also means monitoring activity and communication, including working to minimize disruptions (40%), while 16% will use technology to follow deliveries.

Retailers are hiring across the board, according to the survey results. They identify several challenges to  getting their workforce holiday ready, including retaining more employees year-round (21%). Knowing the concerns that loomed, 21% said they would hire earlier, while 17% indicated they had already begun hiring their holiday staff. Not surprisingly, 16% believe they would have trouble finding these workers. 13% said they might provide incentives in the hiring process. Assessing the challenges also means some outsourcing would be underway, with plans to do so for customer service (14%) and similar numbers for fulfillment (13%).

Most shoppers in the Digital Commerce360/Bizrate Insights pre-holiday survey indicate they will do 50% of their shopping on Amazon, and 27% say it will be more than in 2021, so retailers have their work cut out for them.

Retailers intend to distinguish themselves with initial efforts focused on money savings. 44% plan to offer free shipping and 24% are looking to have lower prices. From a user experience perspective, loyalty programs will play a role for 40%. Retailers have also realized the value of delivering more personalized experiences, which will garner shoppers’ attention (40%). Greater customer service attention is also on the list of 34% of retailers. Upgraded onsite content, at 31%, rounds out the list of retailer priorities.

Retailers also look to address assortments, with 34% attempting to deliver unique or curated selections while 29% take a shot at more creative gifting offerings. 30% will look to expand the number of marketplaces. The emphasis on logistics and delivery remains, with retailers citing faster delivery (19%) and same-day delivery (17%). Retailers also emphasize omnichannel. 19% cited better cross-channel integration and 13% cited the expansion and better execution of omnichannel services.

Of course, we did want to understand if retailers had plans to alter their free shipping strategies. Only 26% of surveyed retailers will be definitively adjusting their free shipping strategies over the holidays, 46% of retailers anticipated no change and 28% were not sure. One can only conclude that this will be a lever retailer will pull as needed throughout the season.

Free shipping strategies center around achieving minimum spending thresholds for 50% of retailers, with 24% offering it unconditionally. On a side note, 16% said their free shipping threshold would be higher in 2022. Loyalty programs would be part of those initiatives for 20% but paid membership would only be a factor for 6%.

They understand that using a mix of tactics regarding free shipping will be important, as 34% suggested. Specific categories (11%) and heavy promotional periods (11%) will see limited use among retailers.

Free shipping has always been a shopper favorite. Knowing that many retailers are not in a financial position to offer this perk, find that they will instead provide an array of shipping options over the holidays. A look at how they stack up from a free and paid perspective is an important starting point..

Free

• Two-day: 43%
• Same-day: 13%
• Next-day: 10%

Paid

• Two-day: 21%
• Next-day: 14%
• Same-day: 13%

Additionally, store-based retailers have an opportunity to leverage the physical store from a shipping perspective with plans as follows:

• BOPIS: 26%
• Ship from store: 20%
• Curbside: 17%
• Companies such as Instacart and DoorDash, or Postmates: 9%
• Alternative locations such as lockers: 6%

Retailers will begin their holiday marketing early in anticipation of consumer interest:

• July-October: 64%
• Early November: 20%
• Cyber-5 or later: 16%

This aggressive nature may be due to customer expectations and retailers looking to capture early seasonal dollars while controlling revenues.

With inflation being what it is, retailers will be employing many promotional tactics throughout the holiday season. From a traditional perspective, 63% will go with the standard % off approach. Beyond that, others intend to employ the following:

•  Buy more, save more: 36%
• Product bundling: 36%
• Gift with purchase: 31%
• Friends/family: 21%
• Bonus rewards for purchasing: 11%

Gift cards remain important for 43%, and financing continues its momentum at 39%. Timing is of interest and both early-season tactics at 39% and last-minute deals for 31% will be in play. Retailers will zero in on consumer interest in marketplaces at 34% while also utilizing channel-specific approaches by 24% to capture attention.

And when all is said and done, returns will also play a role. The feel-good nature of these policies may be more crucial than their ultimate usage. Retailers are embracing more customer-centric return policies starting with extended return deadlines.

Retailers are generally optimistic about the holidays. They know inflation, supply challenges and inventory concerns are on the minds of consumers. Despite the obstacles, they hope to deliver inspiring customer experiences and exemplary customer service to keep online shoppers happy. And hopefully, a little free shipping along the way will keep customers buying all season long.