- The 2021 US holiday season posted the strongest retail growth in more than 20 years, bolstered by resurgent brick-and-mortar sales and healthy ecommerce growth.
- Our look ahead to the 2022 holiday season forecasts healthy consumer spending patterns and a more stable supply chain.
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Holiday 2021’s historically strong retail growth stemmed from robust consumer spending, particularly at brick-and-mortar retail. Physical retail growth surpassed ecommerce for the first time on record, as consumers returned to in-person shopping. A strong labor market, rising wages, and government stimulus gave consumers more discretionary income to spend on holiday gifts last year.
The 2022 holiday sales outlook is solid, but retailers will need to adapt to a fundamental realignment of the shopping season. Two seasons of pandemic-driven holiday shopping will result in lasting changes to the holiday promotional calendar and reset consumers’ expectations around when to shop for the best deals. The 2022 holiday season will be longer and flatter, with less concentrated spending during the Cyber Five period.
Key factors behind holiday 2021’s retail growth
The 2021 holiday season saw the fastest retail YoY growth in over 20 years, largely thanks to accelerating wage growth, the lasting effects of government stimulus, and an elevated stock market. There are a few other reasons, however, that this past holiday season saw record numbers across channels.
Holiday shopping started early in 2021, pulling demand forward. Early Black Friday promotions were unveiled as early as October, driving a surge in pre-Thanksgiving shopping activity. Consumers were also spurred into early purchasing due to their awareness of widespread supply chain issues. According to a Digital.com survey conducted by Pollfish, 56% of US adults began holiday shopping before Thanksgiving weekend, with 28% starting before November. The Cyber Five period—from Thanksgiving through Cyber Monday—featured the heaviest spending days of the season but fell short of holiday sales expectations thanks to this early November spending concentration.
Overall holiday retail sales also grew because many early discounts and promotions were short-lived and muted later in the season. Retailers unloaded their previous season’s inventory with discounts in October and early November, then curtailed their promotions during peak season to bolster their bottom lines.
Per Adobe, with the exception of apparel and toys, every key category saw less aggressive discounting in 2021 versus the prior year. The overall level of holiday discounting was 9% in 2021, down from 14% in 2020.
Part of the strong spending growth also came from inflation. Despite healthy consumer spending, dollars didn’t stretch as far during the 2021 holidays as they usually do. The combination of constrained supply and heavy consumer demand pushed prices 3.1% higher this holiday season versus a year ago, according to Adobe. Key holiday categories like apparel (up 16.7%) and tools and home improvement (up 7.1%) were among the most affected.
And finally, following a mid-December spike in COVID-19 cases from the omicron variant, stores were able to make a quick and necessary pivot to click-and-collect, which was an especially favored shopping method in 2020. This late-season hesitancy was a boon to leading multichannel retailers, who were able to be more flexible in their selling habits, and consumers responded well. Though click-and-collect declined slightly as a percentage of ecommerce orders versus 2020 at available retailers, it still drove nearly 1 in 4 online transactions.
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Exploring growth across every channel
2021 holiday sales growth performed well across every channel, with brick-and-mortar sales exceeding our expectations and ecommerce sales slightly underperforming. Total holiday retail sales jumped 16.1% to $1.221 trillion in 2021.
Notably, brick-and-mortar growth outpaced ecommerce growth for the first time on record. In-store sales typically grow in the low single digits, while ecommerce has consistently posted growth in the mid-teens. This past season saw brick-and-mortar surge to growth rates more typical of ecommerce, while ecommerce barely scratched double digits—albeit from a particularly challenging 2020 comparison.
Non-ecommerce holiday sales jumped 17.3% to $1.017 trillion, surpassing the $1 trillion milestone and gaining share on ecommerce for the first time on record. What’s more, the massive gain wasn’t simply a rebound off mid-pandemic declines—holiday 2020 brick-and-mortar was actually up from the prior year.
Ecommerce growth reached double digits, rising 10.4% to $204.20 billion, a solid performance following the dramatic 32.0% surge in 2020. While this was our lowest holiday ecommerce growth rate on record, we believe this was primarily driven by the year-ago comparisons.
Mcommerce reached record levels as conversion improved. We estimate that mcommerce accounted for 45.9% of holiday ecommerce sales, up from 44.2% the prior year. Per Adobe, smartphones drove a record 61% of retail visits and 43% of spending.
Cross-channel outlook for holiday 2022
We forecast that US retail holiday sales will rise 3.3% to $1.262 trillion in 2022. This return to modest spending gains should align with a more typical consumer economy.
Brick-and-mortar sales will increase 0.9% to $1.026 trillion. We believe growth rates will return to their normal territory of low single digits. Although well below the unprecedented 17.3% jump in 2021, sustaining these massive gains should be seen as a positive indicator of the continued health of the channel.
Ecommerce growth will bounce back to mid-teens growth, rising 15.5% to $235.86 billion. This will put the channel back squarely in the growth range it had been experiencing pre-pandemic.
For mcommerce, we forecast 2022 holiday sales to hit $116.98 billion, or 49.6% of overall ecommerce sales. That also means we are likely one year away from mcommerce accounting for the majority of holiday ecommerce.
Across all channels, holiday sales during Cyber Five period will further decline this year, as we expect recent trends to hold. Cyber Five’s share of holiday ecommerce sales will decline from 16.9% to 16.4%, and well below the 2019 high water mark of 20.0%. Demand will continue to pull forward earlier into the season.
Disruptive factors for 2022’s holiday sales
The 2022 holiday season depends on the extent to which strong consumer spending trends persist in the face of rising economic volatility and uncertainty. Here are five factors with the potential to substantially alter the 2022 holiday outlook:
- Recent consumer spending strength has yet to fully internalize the impact of inflation. While key inflation drivers like low unemployment, rising wages, and supply constraints persist, US consumers in 2022 will not be as buoyed by extra cash as they were in 2020 and 2021.
- The pandemic not only accomplished the rare feat of upending the promotional calendar, but a second year of disruption may be enough to fundamentally realign holiday promotions. The more recent shift to always-on, digital-first shopping will likely establish an earlier shopping cadence going forward.
- The sharp increase in digital ad prices—in many cases jumping between 20% to 40% versus the prior year—has completely changed the bottom-line calculus for retail brands. Retailers will need to get creative to drive more organic traffic, find ad arbitrage opportunities, and navigate measurement challenges to keep pace with past digital ad performance.
- The worst of the supply chain disruptions may be in the rearview mirror but there are still issues to be resolved, and any additional hiccups will cause heartburn for retailers and result in rising input costs, suboptimal inventory timing, missed sales opportunities, and getting dinged by marketplace algorithms for out-of-stock products.
- And finally, we cannot ignore the fact that mcommerce is on the brink of a majority. 2022 will see mcommerce drive essentially 50% of ecommerce holiday sales. The stakes are rising to establish a strong mobile brand presence, drive app engagement, and create seamless mobile transaction flow that becomes habit-forming for consumers.
