What Summer Retail Trends Tell Us About the Rest of 2021
So much for hot vax summer where shoppers were going to be vaxxed, waxed and ready to spend. It wasn’t all bad news for retailers, but the reality was certainly different than the hype.
Here’s how this summer actually played out – and what it tells us about what’s ahead this fall for retail.
June: A Brief Return to “Normal”
As vaccines went into arms and the world opened up, consumers did more of everything. They traveled, they entertained, they went to restaurants, and they went to physical stores to shop. What they didn’t do as much was go online. All of this is supported by hard facts around decreased screen time, a huge lift in retail store foot traffic, a lift in retail store sales, and slowing growth for ecommerce sales overall from pandemic levels. Through it all, the news cycle was markedly positive and Delta was not in the news (as much) yet.
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July: Rising CPMs and CPCs
Total retail sales picked up slightly in July over June in many areas (though not all), but the direct-to-consumer industry was plagued with multiple challenges, primarily in digital channels like paid search and paid social. The reduced screen time meant lower ad impressions and with lower ad inventory (but still strong demand from marketers). Cost-per-click on Google increased 20% and the cost of Facebook ads increased 50%. This rising cost of digital media. CPCs and CPMs, along with the challenges brought on by the Apple iOS platform challenges (less tracking, less measurement, and less targeting), meant that digital media largely underperformed in July. We saw the combined revenue from paid social decline by 25% in July compared to May.
August: Bad News Did Not Keep Consumers From Spending
The news cycle turned very negative in August with rising Covid cases and new variants. Coupled with other negative (who are we kidding, alarming!) headlines around wildfires, hurricanes, floods, Afghanistan, election recalls and more, it’s no small wonder that August was turned out to be a solid month for retail, beating out expectations from many. Even with supply chain challenges leading to lower inventory levels, retailers still did better than expected.
So what does all this tell us about what the Fall and Winter season hold for retailers?
– Consumers are resilient. When it’s safe to spend, they will and there’s still plenty of pent-up demand.
– Q4 still looks good. In August, in our own informal survey of online retailers, a vast majority of were still optimistic, especially when it comes to affluent consumers. And the forecast is particularly good for direct-to-consumer brands: they grew 45.5% from 2019 to 2020, and U.S. digital D2C sales are expected to grow another 15.9% in 2021, reaching $175 billion by 2023 according to research from eMarketer.
– Online shopping is more seasonal than ever. There’s every reason to expect that online shopping this fall and winter will surge again, especially as the weather turns cooler. More screentime equals more shopping time for U.S. consumers.
– Don’t let supply chain problems turn into disappointed customers. Use it as an opportunity to encourage shoppers to lock in holiday shopping early.
– Speaking of which … the 2021 holidays have already started. 2020 was an extended, ecommerce-driven holiday shopping season – expect the same in 2021. Pent-up demand may result in even earlier activity this year as well, so brands should start connecting with both loyal and new customers now.
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– Digital media buys are going to get even more expensive – and hard to target. Less tracking, less measurement, and less targeting thanks to Apple’s recent privacy changes to the identifier for advertising (IDFA) on mobile are going to make online advertising more challenging before it gets better. Meanwhile, Facebook ads are projected to jump 100% year over year. Consider getting creative with your media buys with things like billboards, SMS, direct mail, retail media and more.