2021 Grocery Holiday Forecast: Positive But Cautious

2021 was a tumultuous year for the retail industry: The COVID-19 pandemic continues to cause seismic shifts in the way consumers shop. While initial, volatile spending in grocery may have slowed significantly as pandemic-related shutdowns subsisted, consumers are still spending in grocery through multiple channels—and regardless of pandemic-related supply chain shortages, the upcoming holiday season is anticipated to be a retail boon. The National Retail Federation (NRF) assures considerable momentum headed into the holidays, projecting November/December sales up 8.5% to 10.5% from 2020—a fairly significant increase from an average gain of about 4.4% over the past five years.  

So consumers are ready to spend. After nearly two years of persisting pandemic effects, the positive onset of vaccinations will see more holiday gatherings—meaning more food, more gifts, more spending. What can the grocery industry expect?  

Omnichannel Advantage 

The unquestionable velocity of digital grocery and pandemic-influenced online shopping behaviors during high-volume holidays means optimized, seamless delivery and click-and-collect services will remain massive advantages to grocery retailers—even as in-store shopping rebounds. It goes without saying: Ecommerce holds significant value for grocery retailers when it comes to providing variety, convenience, and innovation in order fulfillment this holiday season. And as is always the case with omnichannel grocery, ease and simplicity will garner the most satisfied customer—and the customer that keeps coming back. A connected store is a successful store.  

The instant gratification of online grocery shopping means consumers get click-happy, spending much more than they might in-store because of convenience and ease-of-use. Capitalizing on higher online spending might mean a colorful, festive online shopping platform; clear and exciting advertisement of exclusive holiday deals and sales; and prioritizing personalization in eCommerce with user-specific suggestions and coupons. Providing additional advantages to online fulfillment like expedited or free shipping and buying online/picking up in-store options will throw a retailer high above the rest when it comes to online shopping.  

Social media shouldn't be ignored as a compelling asset to online grocery. This holiday season, consumers will look for—and be most impacted by—engaging, honest, and educational social posts from grocers. Investment in proactive customer care that keeps lines of communication open between social channels and the retailer is also a must: Recent Sprout Social research finds that messages increase 18%  more during the holiday season. Don’t leave consumers in the cold! 

Back to the Stores: Delighting & Surprising 

On the opposite end of the omnichannel spectrum, retailers shouldn’t let in-store experiences fall by the wayside. NRF stipulates that “while eCommerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience.” The experience of holiday shopping will hold high value this season: Concern for in-person shopping at the height of the pandemic was a loss to many who enjoy the novelty of discovering seasonal treats, displays, and discounts in a physical storefront. 

What does this mean for grocery retailers? Innovation, advertising, and smart displays are keystones to holiday success. The question isn’t will consumers spend with grocery retailers: The question is how much. Ecommerce draws higher spending—ease of click-and-collect tends to encourage larger cart sizes—but the in-store advantage remains delight. Seasonal flavored cookies and crackers, a kaleidoscope of branded candy canes, targeted display groupings for popular holiday recipes: This is what brings delight to the seasonal grocery shopper. After holidays past of rushing through the store or ordering groceries online due to health concerns, shoppers are ready to return to the store and indulge in the joy of discovery. 

Challenges and Opportunities 

Troubling pandemic effects like labor and supply constraints are certainly top-of-mind for grocery operations teams entering the holiday season. Pressure on the global supply chain is affecting retail cost, and the squeeze is even more damaging during times with higher-than-ever demand for goods and services. Inflation concerns are pressing consumers as well, causing smarter spending decisions on fewer items, a trend benefited by online shopping venues.  

Supply and demand is a perpetual challenge for retailers: Add in factors of global pandemic and fluctuating economy, and worries intensify. Grocers would do well to prepare for early online demand now: 2021 sees consumers buying earlier than ever—especially online!—to abate panic over supply shortages. NRF Chief Economist Jack Kleinhenz suggests that consumers may seek to shop early in light of supply chain shortages. “...if retailers can keep merchandise on the shelves and merchandise arrives before Christmas,” Kleinhenz explains, “it could be a stellar holiday sales season.” Recent Food Industry Association report “U.S. Grocery Shopper Trends COVID-19 Tracker: Holidays” found consumers surveyed anticipate grocery shopping ahead of time for the holidays either in-person (cited by 14% for Thanksgiving, 16% for Christmas/winter holidays, 14% for New Year’s) or ordering food/beverages online (33% for Thanksgiving, 28% for Christmas/winter holidays, 22% for New Year’s).  

Beyond ordering online, in-store tensions will run high during the holidays: Shoppers are in a hurry and have very specific needs. Robust customer service will also be an enormous asset to omnichannel systems: proactive online tech support, in-store assistance, and delivery representatives are vital to a successful shopping experience. Loss prevention and asset protection should also remain high-priority during high-volume months when theft, fraud, and counterfeit could go undetected. Preparing and training staff to be aware of high-tension situations and procedures for dealing with aftermaths can only help the season go smoothly.  

And on the note of staff: Labor shortages continue to see grocers hurting. Many retailers are offering holiday-season hiring bonuses and incentives to draw the labor needed to cover during the busiest time of the year. Grocers can use the variety of new roles and responsibilities brought about by burgeoning omnichannel systems to their advantage, offering schedule flexibility, the opportunity to learn new skills,  upward job mobility, and unique experiences for career development. Fulfillment and eCommerce roles touch on different skill sets and may be able to sweep in a wider pool of applicants, especially to fill the demand of holiday labor.  

Pandemic concerns of cleanliness and health also remain viable as crowds increase and flu season arrives. Maintaining robust sanitation protocols and instilling COVID-era principles of personal responsibility to keep employees and consumers safe is an unquestionable necessity. Thanks to vaccination rates and continuously responsible retail reactions, increased in-store shopping is possible this holiday season: to which consumers would say, keep up the great work!  

Forecasting With Hope 

The holiday season is looking bright, but as with any smart forecast, retailers should adopt both hard and historical holiday performance data, examine yearly business and consumer trends, and consider pressing contextual variables (i.e., global pandemic) when searching for a reliable outlook. Add in some healthy skepticism, a dash of holiday cheer, and the 2021 Deloitte insight that 73% of retail executives expect shoppers to spend more or significantly more this holiday season—and you’ve got a stellar forecast.  

Happy retailing from all of us at ADC!