Online shopping has advanced five years in the past three quarters. Next year it will advance even more. Consumers want convenience, and Amazon has unleashed many competitors with different takes on how to buy right from an ad. Remember “native advertising” from a few years ago? We are now beginning to see “native commerce.” Still too nascent to be a trend this Christmas, this kind of shopping will transform 2021.

1. Retail sales will increase, but only a bit. According to Deloitte’s annual holiday retail forecast, holiday retail sales are likely to increase between 1-1.5%. Overall, Deloitte’s retail and distribution team projects that holiday spending will result in sales of approximately $1.15 Trillion during the November-January timeframe. This is considered slow growth that’s due to the K-shaped nature of the recovery.

2. The increase will come from e-commerce. Deloitte also forecasts that e-commerce sales will grow by 25-35% YoY during the 2020-2021 holiday season, compared to sales increasing by 14.7% in 2019. E-commerce holiday sales are expected to generate approximately $190 billion this season. They have become a much larger percentage of overall sales.

3. Although advertising media spend is down, in general, CTV spend is up. Advertising media spend is down from last year’s $586 to this year’s $517 billion and will continue to catch up in 2021. However, certain areas of advertising, such as CTV, are actually benefiting from the pandemic as consumers continue to watch more TV.

 

Graph showing advertising media spend in 2020

Source: Statista 2020

 

4. Resilient consumers are still spending. Consumer confidence is down because of health anxiety and concerns over the economy, yet no one has considered canceling Christmas. On the contrary, some spending habits have changed, but resilient consumers will still celebrate, perhaps without travel. Shoppers expect to spend $1,387 per household during the holiday season this year, down -7% YoY. Non-gift items such as home furnishings and seasonal décor are on the rise (+12% YoY), as is fitness equipment. 

5. This year, there was no single Black Friday. Merchants thought it should be in October, but consumers didn’t buy that. Because merchants have been worried about third-party logistics over the holiday season with so much more online shopping, they offered their Black Friday deals earlier. They also did it to spread the traffic in stores. Consumers, however, have not been cooperating. Although the industry wanted them to shop earlier, the average shopping window is expected to be 1.5 weeks shorter this year as consumers plan to start at the same time as in previous years.  

6. There won’t be much browsing in stores. Consumers are all about efficiency. They want to go into a store, choose quickly, pay with a contactless solution, and exit just as quickly. Because so many stores have closed this year (upwards of 25,000), the remaining stores started to transform themselves into fulfillment centers. Amazon already offers same-day delivery, and Walmart, Target, and BestBuy are headed in the same direction. Legacy store brands that can’t adapt will not succeed, especially this year. 

What does this mean for online advertising? 

Online ad budgets continue to grow, showing some directions in which change is taking place. TV, whether linear, VOD, or OTT, is a heavy favorite with brands who want to get their messages out.

Facebook has fallen out of favor, somewhat, with buyers looking to diversify away from their heavy dependence on it. For the open web, which has struggled to keep the 20% of ad budgets left after Google and Facebook spend, this is good news. It means that publishers can forge partnerships with brands directly and that supply chain optimization will probably succeed next year. Middlemen will have to prove their value.

Even though it’s too early to tell, we can predict with some certainty that shopping is going social. Both Snapchat and TikTok have rolled out new tools for social shopper, and Instagram has expanded its efforts. This is all heading to on-platform buying, which is most-likely why Twitter has launched Fleet, its video tweets tool, right before the holidays. Now is the time to refine your brand’s platform strategy.

 

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