Holiday season 2022 surprised retailers as they were rewarded for their ingenuity and flexibility in meeting shopper’s needs. According to the National Retail Federation (NFR), retail sales last November-December grew 5.3% over 2021 to $936.3 billion, falling short of their forecast amid continuing inflation and high interest rates. Even though holiday growth was less than expected, 2022 sales grew 7% over 2021 to $4.9 trillion, meeting the NRF’s forecast of between 6% and 8% growth for the year. Online sales were up 9.5% according to the NRF’s same report.
“The last two years of retail sales have been unprecedented, and no one ever thought it was sustainable. Nonetheless, we closed out 2022 with impressive annual retail sales and a respectable holiday season despite historic levels of inflation and interest rate hikes to cool the economy,” said NFR president and CEO Matthew Shay in their recap of the holiday 2022 season. “Consumers shopped in record numbers and retailers delivered positive holiday experiences to inflation-wary consumers, offering great products at more promotional price levels to fit their stretched budgets. The fact that we saw retail sales growth on top of December’s 14% gain in 2022 shows the resilience of consumers and the creativity of retailers in driving consumption and economic activity while addressing high inflation and continued cost pressures.”
Retailers rose to the occasion and so did consumers. As retailers prepare for Peak 2023, what can they learn from last years’ experience?
Meet Consumers Where They Are
“One of the biggest lessons was that despite economic uncertainty and high inflation, shoppers responded to retailers’ efforts to meet them where they were — in this case, with strategic discounts, flexible fulfillment options like BOPIS, and seamless returns,” said Matt Barr, VP Marketing & Product, at Radial. “We saw a solid effort by retailers to address the real challenges and obstacles consumers were facing that not only drove sales, but helped people achieve their holiday goals.”
According to a Salesforce report, online sales performance was driven by increased prices, rather than increased shopper demand. At the same time, strategic discounts held that spiked to 30% during Cyber Week, helped shape consumer demand. Lastly, buy online, pickup in store (BOPIS) helped save the holiday for many last minute shoppers who missed the shipping cutoffs, with the Friday before Christmas seeing the highest rate of BOPIS orders at 35%.
Salesforce also reported the continued rise of mobile and social shopping, which saw max traffic of 78% during Christmas and Boxing week. Overall mobile order share rose from 60% in 2021 to 63% in 2023, with a peak of 68% during Christmas and Boxing week.
Lastly, consumers took advantage of seamless return policies as returns nearly doubled the week after Cyber Week compared to 2021 and remained high throughout December. In fact, unlike traditional seasons when returns peak after Christmas, the 2022 season experienced more returns in the two weeks before December 25th — potentially early-bird shoppers making good on even greater discounts, or shoppers adjusting their holiday spend at the last minute.
What does this all mean for the 2023 peak season?
Some overarching themes play out:
- Consumers respond to being met where they are. As we enter the 2023 peak season, retailers that shape their strategy to address the real challenges shoppers are facing will create opportunities. Whether with discounting, flexible returns, more fulfillment options, buy now pay later offerings — the more effort retailers put into catering to convenience, affordability, and support — the greater likelihood shoppers will spend.
- Mobile and social are important revenue drivers. This may seem obvious, but retailers that invest in optimizing their mobile and social strategies with personalized, curated offers, incentives, and recommendations will see dividends.
- Multiple fulfillment options are table stakes now. The pandemic ushered in the popularity of store fulfillment options, like BOPIS, and shoppers rely on these options to meet their lifestyles, schedules, and spending habits. BOPIS enabled retailers to garner online order revenue past traditional shipping cutoffs, which gave them a distinct advantage over competitors that did not offer BOPIS. Customers will expect these store fulfillment options are part of their holiday shopping gameplan.
- Returns need to be frictionless. Given that an easy return policy helps bolster consumer confidence in their buying decisions, it’s an important part of the strategy and one that needs to be made very clear before checkout. While the spike in returns that happened before Dec. 25th last year may or may not repeat this year, retailers need to be prepared to meet that added demand during an already exceptionally busy time. Bolstering the reverse logistics strategy and resources will help ensure any pre-holiday returns are processed expediently and that inventory is quickly made available for purchase while demands are high.
Overall, retailers that offered discounts, flexibility, convenience, and peace of mind with hassle-free returns, demonstrated that even inflation-weary consumers will respond to conducive factors.
“At Radial, we help retailers scale to meet peak demands and have the global resources, facilities, staff, and technology to truly partner with brands during their busiest times,” said Barr. “Any retailer that needs peace of mind that they will be able to quickly and easily meet peak demands would benefit from working with Radial.”
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