Retail Predictions for 2022 Holiday Season

December is just a few months away, and there are many challenges – predictable and unpredictable – that can impact the holiday season. SoundCommerce has identified three retail holiday predictions for the 2022 holiday season that we hope will help our retail partners ensure a successful and profitable holiday season. 

1. The most successful retailers will move beyond revenue KPIs and will be measuring profitability. 

Online shoppers spent a record $204.5 billion during the 2021 holiday shopping season, up 8.6% year over year, according to Adobe. But inflation and other economic factors could impact consumer spending power in 2022. Additionally, shoppers expect discounts and free shipping that both directly impact the profitability of every transaction. One of the most important ways retailers can improve performance this holiday season is by calculating the true cost of product discounts, promotions, and shipping tiers to ensure every order is profitable. Calculate promotion discounts and free or paid shipping tiers with an eye toward maintaining order profitability for every transaction. 

The most successful retailers are moving past revenue KPIs to optimize marketing programs for profitability. Get your marketing campaigns and transaction systems cross-functionally aligned now to establish a solid baseline for profitability going into the holiday season. Alignment in these areas will let you confidently and precisely pivot on profit opportunities as well as reduce and mitigate risks throughout the holiday season. Additionally, with detailed and up-to-date data integrations and reporting, you’ll be confident in the accuracy of the data and analytics insights you’re using to drive decisions.

Take time to do a deep analysis of past promotions and other seasonal deals you’ve offered previously to identify what drives success. Marketers need to leverage data from past successful promotions as a baseline to drive new strategies for this holiday season — a season we know will be challenging given the current economic environment. First, identify exactly which promotions you should and should not repeat and take into account the profitability of those promotions. Evaluate your shopper segments by profitability as well. Build an understanding of which segments are top, middle and bottom profit-drivers through the lens of Customer Lifetime Value, instrumented as a contribution profit KPI.  

2. Supply Chain Fears Will Impact Shopper Behaviors 

According to McKinsey, the ongoing supply chain crisis is a key motivator for consumers to start their holiday shopping early. Fifty one percent of retail consumers are concerned about a potential lack of inventory. Retailers need to ensure they quantify and forecast product demand for new and existing customers to help inform the inventory levels they maintain for each product. Identifying possible inventory and availability risks as early as possible allows retailers the time to prepare alternative plans. This planning will help guarantee you have enough depth and variety of products available for each of your customer segments to maximize sales and profits during the 2022 holiday selling season. This year, given past supply chain issues you may need to focus on how promotions balance order profitability with your ability to clear aging inventory that arrived late from your suppliers.

According to McKinsey, fifty one percent of holiday shoppers are concerned about a potential lack of inventory and forty five percent are worried about slow shipping times.

McKinsey also identified that forty five percent of retail shoppers are worried about slow shipping times. Retail shoppers are accustomed to delivery delays by USPS, Fedex, and UPS, but order delays before carrier pickup is a sure way to damage consumer loyalty and future purchasing potential. Warehouse and 3PL inefficiencies can delay orders from shipping, and even result in incorrect items being shipped – all negatively impacting the shopping experience.

Now is the time to make changes to pick, pack, and ship procedures. Identify opportunities to increase efficiencies and test them during one of your summer promotion periods, well in advance of the holidays. Ironing out warehouse processes during these pre-holiday promotions will save you headaches later and will help to guarantee your customers have a positive holiday order experience. 

3. Unique and Personalized Customer Experiences Will Matter

Consumers are increasingly interested in shopping experiences that go beyond simply clicking through category pages on a website or browsing the racks of a store. According to research from LivePerson, forty five percent of online holiday shoppers in 2021 wanted to access a virtual showroom during the holiday season. With the recent increase in retailers offering virtual shopping experiences, we can assume this number has grown during the past year. To be successful in the 2022 holiday season, retailers will need to identify ways they can personalize the digital shopping experience to fulfill shopper requirements. Retail shoppers all have different shopping behaviors based on need and convenience. Retailers must offer a variety of digital purchase options including:

  • Ship to home 
  • Same day home delivery 
  • In-store pick-up 
  • Virtual showrooms
  • Virtual sizing and dressing rooms

Many retail shoppers expect these options in addition to payment options such as buy now, pay later. Consumer experiences related to product fits and sizing can also positively impact sales and customer loyalty. All of these different shopping experience options will encourage customers to shop with you instead of your competition.

In addition to different shopping behaviors, each of your customer segments uses different social media platforms. Plan your social media strategy to include exclusive promotions for specific, segmented customer lists. This will increase customer engagement, and provide a more personalized shopping experience. Establishing unique, positive customer experiences will guarantee you never risk an opportunity to capture a sale or retain a loyal customer.

Set Yourself Apart from the Competition

Taking the time this summer to prepare for the 2022 holiday season will help set your brand and shopper experience apart from your competition and guarantee that you’re in the best possible position to have record sales and the most successful holiday shopping season yet.

Download SoundCommerce’s Holiday Readiness Checklist to quickly organize all the actions your team can take now, in advance of the holidays, to best prepare for the 2022 holiday season.

Need help pivoting from measuring revenue to measuring profit? We’d love to chat, contact us today and we can show you how SoundCommerce can help.

Megan Petersen is a Senior Marketing Manager at SoundCommerce. In addition to previous SaaS roles, a majority of her career has been spent in eCommerce and digital experience roles at several retail brands including Theory, Helmut Lang, and Jack Rogers. Outside of work, Megan can be found hiking, skiing, or traveling with her family.