Supply Chain Woes, Yearning for Normal, Sway Holiday Buying Habits

Concerns over supply chain snags, delivery delays, and a yearning for a return to normal are influencing consumer shopping habits this holiday season.

“The biggest change this year is that shopping has started earlier than in the past,” observed Dave Sekera, chief U.S. market strategist with Morningstar, an investment research company in Chicago.

“The retailers and the media have done a pretty good job informing consumers about the issues we have in the inventory chain this year,” he told the E-Commerce Times. “Consumers have started shopping earlier so they can find and get specific items that they’re looking for.”

Shopping is starting to be extended over a longer period of time instead of peaking on Black Friday and Cyber Monday, explained Bill Lewis, a director in the retail practice of AlixPartners, a global, multi-industry consulting firm.

“Black Friday and Cyber Monday are still important shopping days, but they’re relatively less important, and shopping patterns are starting to smooth out and become less spikey,” he told the E-Commerce Times.

“Black Friday is no longer a weekend event. It’s a month-long event,” added Bernadette Nixon, CEO of Algolia, a provider of a search-as-a-service platform for businesses in San Francisco.

“People took advantage of that this year,” she told the E-Commerce Times.

The extended shopping season wasn’t the only thing dulling the pizzazz typically connected to Black Friday and Cyber Monday.

“Given that discounts were less aggressive this year due to the shortages, I didn’t see as much interest in waiting for Black Friday or Cyber Monday,” observed Rob Enderle, president and principal analyst with Enderle Group, an advisory services firm in Bend, Ore.

“The events seemed to be far less visible, likely because it makes no sense to discount something you know you will run out of,” he told the E-Commerce Times.

Gift Cards Popular

However, in its Holiday Retail Report released Tuesday, global payment services provider Square questioned whether consumers are shopping earlier than usual.

“While retailers were urging consumers to start shopping earlier this year, Square found there was no considerable spike in consumer purchasing during the months of September and October, indicating that holiday shopping did not, in fact, start earlier despite warnings,” observed Square Economist Felipe Chacon.

“We have, however, seen evidence that the way people are spending for the holidays has shifted this year with gift card sales, both physical and electronic, having increased substantially in recent months compared with the same time last year,” he told the E-Commerce Times.

According to Square, supply chain constraints are risking on-time gift arrival, resulting in consumer gift card purchases increasing 43 percent, with physical gift cards increasing 46 percent and e-gift card purchases jumping 29 percent.

Retailers are already preparing for consumers opting for gift cards instead of physical gifts, it added, with 32 percent more businesses having sold gift cards this year compared to last.

“I mostly gave gift cards before Thanksgiving to better assure that the things people wanted would still be available,” Enderle said.

Shortage Skeptics

In a recent survey of 1,000 U.S. adults, Algolia found concern about shortages relatively low, with only one in three consumers (33 percent) concerned about product shortages.

Meanwhile, 20 percent of the adults surveyed said they believed the news about supply shortages was overhyped, and only 11 percent found a gift or product out-of-stock when they tried to buy it.

In its retail report, Square predicted that this holiday season won’t deviate considerably from years past. As shoppers are excited to return to physical stores, it noted in-person purchasing is up compared to last year, signaling a return to normal.

“Consumers want to return to and experience the traditional holiday activities they missed out on last year,” Sekera observed.

“In-person shopping is part of that holiday experience, so we’re seeing consumers return to in-person shopping,” he continued. “Foot traffic has risen to pre-pandemic levels.”

Because of concerns about shipping delays, some consumers are taking a hybrid approach to shopping.

“While they’re ordering online, they’re still willing to go to the store to make pickups so they don’t have to worry about deliveries coming after the holidays are over,” Sekera explained.

Delivery windows may widen as Christmas approaches. “I was speaking with one retailer who anticipates that the closer and closer they get to Christmas, delivery times could expand up to 10 days when they usually do one or two-day deliveries,” Nixon said.

Brick-and-Mortar Resurgence

Consumers’ return to brick-and-mortar stores has enriched the channel that was harmed by the pandemic.

The steady, gradual growth of e-commerce dramatically accelerated during the pandemic, elevating the amount consumers spent shopping online to almost equal to the amount consumers spent in stores, the NPD Group noted in a report released Monday.

Now, it continued, with brick-and-mortar stores open across the U.S., online revenue growth is slowing down. At the same time, physical store sales have increased, rising to 64 percent of all retail sales in September 2021.

“Physical stores are more relevant today than they were before the pandemic,” Marshal Cohen, chief retail industry advisor for NPD, said in a news release.

“Consumers are no longer buying primarily out of necessity and limited to online shopping, which fell short of some expectations — choice has reentered the equation, and they are hungrier than ever for the experience of in-person shopping,” he added.

Grinch Called Inflation

Rising sales, however, won’t always translate into additional in-store sales or gifts under the Christmas tree.

Sekera explained that the retail industry is shifting toward the omnichannel approach. That combines in-store — which includes curbside and in-store pickup, as well as delivery — online and mobile. “So while foot traffic is up at the stores, the actual purchase may not occur in the store.”

He also noted that while shoppers may be spending more this year, that doesn’t necessarily equate to much of an increase in gifts under the tree. While the nominal amount of spending is expected to be high, up to half of that spending could be owed to the impact of inflation.

The greatest influencer of consumer shopping habits during the holidays, however, may be the seemingly never-ending pandemic.

“The pandemic has changed shopping behavior for good,” observed Lewis. “It accelerated a shift to e-commerce, and that shift has continued to take hold.”