Like 2020, the theme of this year's holiday season is unpredictability, retail experts say. As a result, marketers will need to remain agile and responsive to challenges old and new while again attempting to do more with less.
COVID-19 irreversibly changed the way people discover and shop — now add compounding forces of the Delta variant, supply chain disruptions and fluctuating consumer sentiment to the already complicated puzzle. Retailers looking to to capture pent-up demand are adapting by shifting the timing of holiday-related marketing, reducing ad budgets, moving away from product-specific creative and embracing a "neutral but hopeful" tone.
"Ironically enough, [unpredictability] is the one thing that we can actually look to last year and work from. But don't assume the same conditions as last year," said Chris Costello, senior director of marketing research at Skai, formerly known as Kenshoo.
Shortages and an extended season squeeze retailers
E-commerce has blurred the lines around the traditional timing of holiday shopping. Several retailers hopped onto last year's delayed Prime Day in October, which resulted in jump-starting and elongating the buying season. That early timing is back this year, with retailers like Amazon, Target and others offering promotions earlier than ever to maximize sales.
"Because consumers are shopping earlier in the season, investments in awareness building could pay off to shift shoppers toward buying earlier while inventory is still available," said Jared Blank, chief marketing officer at enterprise digital commerce platform VTEX.
Home Depot, for instance, sold out of an early release of Halloween decorations in August — an indicator that consumers may have a similar appetite for Christmas decorations as well.
"We can't wait until a week or two before Black Friday. It is now, and I think that is a trend that has already been emerging for the last couple years, but last year it really hit home," said Mike Ferris, The North Face's vice president of global brand management.
"Consumers expect really seamless experiences with a lot of transparency."
Mike Ferris
VP of global brand management, The North Face
But before gifts can make it under holiday trees, they'll have to navigate one of the largest traffic jams modern supply chains have experienced. Disruptions are wreaking havoc on industries from retail and CPG to automotive, causing some marketers to trim fourth-quarter ad budgets and scrutinize 2022 spending plans. These shortages — coupled with a lack of labor at stores and distribution centers — are already weighing on consumer loyalty. More than 80% of people bought a different brand than their usual in the past three months, with lower prices (65%) and out-of-stock products (51%) as primary motivating factors.
"Marketers are now making the difficult decision about whether to pull back on advertising, shift to a more brand-focused message, or try a different approach where they shift more dollars to digital to give themselves flexibility on creative," Blank said.
Beyond empty shelves threatening to spoil the holidays for consumers that don't shop early, issues with product shortages could stretch into mid-2022. Many phases of the manufacturing and delivery processes are taking longer than normal, and consumers can expect packages to take more time to get to their doors as carriers like UPS and FedEx cope with their own bottlenecks.
One way for retail brands to get ahead of consumer frustrations is to manage expectations, according to Ferris.
"Consumers expect really seamless experiences with a lot of transparency. I think just being transparent around that reality when consumers can expect product that they bought or when product will become available is important from a messaging perspective," Ferris said.
Appealing to consumer sensitivities
With many factors up and down the supply chain beyond their control, some marketers have also had to pivot their messaging approach. Brands across industries are reacting by producing multiple versions of creative assets in preparation for various scenarios the holiday season could bring. Additional creative and flexible messaging let marketers more agilely change campaigns on the fly, while data-driven tools can help to avoid spending inefficiently on promoting out-of-stock products and providing a poor user experience.
"Heading into the holiday season, brands are rethinking their ad strategies and moving away from product-specific creative given the supply chain issues that are making it difficult to predict whether inventory will be available," VTEX's Blank said.
On top of disparate messaging to adapt to shortages, some marketers are adjusting creative in light of widening differences in consumer sentiment: Some folks are ready to emerge from the pandemic, while others remain cautious amid the global health crisis.
"It's going to be a particularly sensitive judgment call for many advertisers. There's no one-size-fits-all strategy, and I think it depends where you sit in terms of your customer base," Skai's Costello said.
"There's no one-size-fits-all strategy, and I think it depends where you sit in terms of your customer base."
Chris Costello
Senior director of marketing research, Skai
In trying to appeal to that sensitivity, the industry may see more regional or local ads over big, splashy national campaigns. Deeper-pocketed advertisers are naturally positioned better than small brands to prepare a swath of creative and target consumers with only the ads that will resonate most, Costello said. A key challenge to this is ensuring different messages and creative are still aligned.
"If you're too disparate across those audiences, are you at risk of one group finding out the way you're reaching the other group?" Costello said. "We've seen a 'neutral but hopeful' approach [that is], pound for pound, probably going to be the most effective way to attract people and not turn people off."
Taking the time to adjust creative to align with consumer nuances can mean the difference between high order value or an empty basket, but preparing contingency plans for any possible scenario puts additional pressure on brands and agencies working to keep up amid their own staffing challenges. For brands looking to avoid a potential headache caused by various assets and on-the-fly adjustments, centering a holiday message around positivity may strike a tone that's palatable for most consumers.
"A big part of the messaging this year needs to ensure [brands] don't lose joy and optimism, but continuing to reinforce how they enable people to be part of something bigger than just their job, whether that is a new hobby, whether it is connections with family, whether it is a connection to the outdoors," The North Face's Ferris said.
Doing more with less
As digital ad costs continue to rise, retail brands are exploring new ways — and resurfacing more traditional channels — to advertise goods and diversify their marketing. Tighter budgets and enduring pandemic-spurred habits are steering retail brands this season toward a focus on full-funnel activity.
"With this explosion of e-commerce, findability becomes very important," Costello said. "It's just being able to have the wherewithal to influence shoppers at all stages of their holiday shopping and planning, and that requires a broader footprint than just being there when they're on the site about to buy. It's more about connected commerce."
The concept of online discovery is far from new, but the way it happens is shifting. Many shoppers are turning to social media apps like Pinterest or style quizzes for personalized inspiration and recommendations. Investing in findability can help brands locate and target the right consumers — and conversely, aid consumers in discovering the right brands and products for them.
With more people returning to some pre-pandemic activities, marketers can expect a mix of buying habits and preferences, Costello suggests. Marketers must adapt and match that.
"Last year there was a lot of online shopping due to necessity. And while some of that necessity still exists, this year is going to be a greater mix of shopping by necessity and shopping by choice. That's where things like findability matter. Don't assume your customers will be the same volume of customers that were able to find you last year," Costello said.
In this new hybrid reality, it's now essential to create convenient, frictionless, omnichannel offerings that bring the store experience online and the digital experience to stores. Solutions like curbside pickup redefined consumer expectations around convenience last year, while online browsing has become more immersive with shoppers looking to mimic some of the in-store experience at home through methods like virtual try-ons or livestream shopping.
Matching these expectations throughout a shopper's journey is a tall order, but marketers can maintain a strong foundation during the holidays by prioritizing the basics: a solid user experience, fast load times, detailed frequently-asked-questions section, and clear and consistent messaging.
"Communicating how you are developing a compelling shopping experience is going to be important as part of the marketing messaging," Ferris said.
