With plenty of warnings that current supply chain challenges may make this holiday season more complicated than usual, everyone is gearing up early. From consumers, retailers, manufacturers, suppliers, carriers, and logistics companies, everyone is planning for a challenge in ordering and receiving products. Additionally, as the year comes to a close, COVID-19 will remain a global X-factor. The threat of the virus will continue to influence consumer buying behavior and force shutdowns in areas where vaccines are in short supply. Additionally, illness and quarantine requirements will continue to remove workers from an already bare-bones workforce.
Despite the widespread unpredictability at play, the following statistics can offer some insights into the 2021 holiday season. They’ll also point to some areas to watch as organizations around the world strive to keep their supply chains flexible and responsive through the end of the year.
Overall Trends in the 2021 Holiday Season
First, we’ll take a look at a few broad developments with implications for retailers—and anyone moving freight through the final quarter of the year.
Consumers Are Ordering Early
On October 13, Amazon Tweeted that it had already sold 1 million toys from its Holiday Toy List. Top hits included LEGO classic sets, the Little Tikes First Slide, and L.O.L Surprise dolls.i
With many news outlets warning of potential holiday toy shortages, this early run on toys wasn’t entirely surprising. The early purchasing trend will likely extend to gifts in other categories as well, so retailers should be prepared for sales as soon as possible.
Gift Card Sales Will Likely Be Big
In a Rise.ai survey comparing December 2019 and December 2020, participating retailers saw a 106.1% increase in digital gift card sales. The data, gathered from 1,528 U.S.-based companies, also revealed that each retailer generated an average of $2.6 million in income from digital gift cards in December 2020. That number was just $1.2 million in December 2019.ii
Additionally, a survey by the National Retail Federation reported that 56% of consumers want to receive gift cards this season, making it the most popular gift option in the survey.iii
Businesses who make it easy for customers to buy and send digital gift cards will likely reap the benefits during the 2021 holiday season.
Volatile Freight Rates
After rising to record highs in August, the spot rate for shipping containers from China dropped significantly in October. Some ocean freight routes saw a 25% price drop, while spot prices for others dropped by almost 50%.iv Additionally, the air freight market capacity remains tight and, as a result, rates have stayed high. In other words, freight rates overall will likely continue to be volatile through the holiday season.
Establishing a strong working relationship with a freight forwarder can help you navigate these challenges and choose the right freight mix for your business.
Predictions Around Consumer Purchasing Behavior
As supply chain and pandemic-related challenges abound, the big question around the 2021 holiday season remains: How will consumers respond?
Unexpected consumer behavior created a significant amount of chaos in global supply chains throughout 2020 and 2021. Stockpiling and panic buying triggered several shortages, such as toilet paper and shelf-stable food. Additionally, consumers shifted significant spending away from services and toward goods, many of which were purchased online. Global supply chains struggled to adapt to the increase in demand, as well as the heightened freight traffic and package volume.
The following predictions and stats may offer some insights as to what we can expect from consumers in the 2021 holiday season.
Overall Sales Projected to Rise in 2021
According to the National Retail Federation, holiday sales in 2020 grew 8.3% over 2019’s figures.v Deloitte has projected a similar rise this year, forecasting a 7-9% increase over 2020.
eCommerce May Continue to Grow
Deloitte predicted that eCommerce will rise 11-15% (vi) as consumers continue to show preference for shopping online, even as the pandemic health and safety concerns wane.
However, a National Retail Federation survey offers a different take saying 3% fewer of their survey respondents planned to make their holiday purchases online this year (57% in 2021, as opposed to 60% in 2020). Instead, they planned to shop more at department stores, discount stores, grocery stores, specialty stores, thrift stores, and outlets than they did in 2020.vii
Travel As a Bellwether
In a recent earnings call, Delta Air Lines reported a “full recovery in domestic travel.” In Q4, the airline is predicting that its capacity will hit 80% of its 2019 levels.viii This return to travel may also signal a return to more traditional consumer behavior. In its annual holiday retail forecast, Deloitte anticipated that consumers will feel increasingly comfortable getting outside their homes and spending more on services.ix
The holiday shopping numbers—including what consumers buy, how they buy it, and how much they spend—will offer some more definitive data as to what retailers can expect in 2022.
Holiday Logistics & Supply Chain Issues
Finally, let’s take a look at some statistics around the unsung heroes of the holidays—the people behind the supply chains that move gifts (and the supplies, parts, and components that make up those finished goods) around the globe.
Parcel Service Will Be Stretched
UPS estimates that daily demand during the 2021 holiday season will exceed capacity by 5 million packages per day.x In a strange way, this might sound like good(ish) news to those who remember that capacity projections for 2020 were as high as 7.2 million parcels over capacity per per day.xi
The bottom line: Anyone moving parcels or packages during the 2021 holiday season would do well to add some cushion time to delivery estimates.
The Driver Shortage Continues
Pre-pandemic, the trucking industry faced a shortage of 61,500 drivers. That number has risen to 80,000, according to Chris Spear, President and CEO of the American Trucking Associations.xii
In other words, in addition to delays in package movement, freight movement during the 2021 holiday season will continue to be affected by driver shortages, which may mean longer delivery times.
Last Year’s Packages Hit Record Volumes
During the 2020 holiday season, 800 million more packages were mailed than in 2019.xiii Volume continued to rise in early 2021 and was up 14% in Q1 alone.xiv
In all likelihood, package volume will be up again for 2021, underscoring the importance of ordering early and leaving wiggle room around delivery dates.
Peak Rates Across the Board
For the first time ever, the U.S. Postal Service will be tacking on additional charges for packages shipped from October 3–December 26. Temporary pricing increases range from $0.25 to $5.00, depending on the package’s origin and destination.xv As they do every year, UPS and FedEx have already instituted peak surcharges through mid-January.xvi
Supply Chain Challenges Will Continue
Shortages and low inventory will play a big role in this holiday season, as supply chain challenges drag on. Adobe Analytics predicts that out-of-stock messages will be up by 172% this holiday season. That represents a 360% increase over two years. Apparel, sporting goods, baby goods, and electronics are expected to be hit the hardest.xvii
Hiring Bonuses and Incentives Are Soaring
Companies across the board are staffing up for the busy holiday season, offering increased hourly rates, perks, and signing bonuses. Nordstrom is offering its supply chain employees premium pay as well as a $2,500 bonus for new employees.xviii
Meeting Your Goals for the Holiday Season
Whether your business sees a bump during the holiday season—or you’re simply trying to continue to do business as usual amidst all the holiday madness—knowing what to expect will help you plan for this final quarter of 2021. These statistics offer you a starting point for predicting what this holiday season will bring, offering you the opportunity to flex and adapt as needed.
If you’re looking for a logistics partner to help you navigate the rest of this holiday season—or prepare for 2022—reach out to one of our experts. We can help you negotiate freight rates, adjust your freight mix, and put together a plan to keep your supply chain operating smoothly amidst any challenges that come your way.
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