The witches have barely had a chance to ride their broomsticks, but retailers are already hearing sleigh bells, rolling out holiday shopping deals earlier than ever as inflation continues to push prices higher and myriad supply chain issues lead to inventory shortages across the board.
Next week, Target will launch its three-day Target Deal Days event, offering discounts online, through its app and, for the first time, at all retail locations. Starting Oct. 10, the Minnesota-based box store chain will also open its Holiday Price Match Guarantee, allowing customers to request an adjustment if Target lowers the price on a previously purchased item through Dec. 24.
“No matter how our guests choose to shop, they can trust that we’ve got them covered,” Christina Hennington, chief growth officer at Target, said in a video posted to the retailer’s blog.
The bigger news, however, came on Monday (Oct. 4), when Amazon said it would begin offering “Black Friday-worthy deals” immediately, on its site and through its app. This is even earlier than last year’s Prime Day, which occurred Oct. 13-14 and kicked off the holiday shopping season, by some estimations.
The eCommerce giant also recently unveiled new shopping features, including the ability to send a gift without knowing the recipient’s address. According to PYMNTS data, nearly 50% of all eCommerce purchases are made through Amazon.
Related news: Amazon Adds Address-Free Gifting Feature Ahead of Holidays
Steve Sadove, senior adviser at Mastercard, told Karen Webster in a recent interview that consumers have been hammered by news about supply chain issues, which is prompting many to start shopping now.
“If I want to buy that hot toy, I want to get that ‘it’ handbag or shoe item, I better get it before they run out,” he said. “That tells you it’s going to be an early season. You better get the key items, as you don’t have the ability to replenish and reorder because the supply chains are delayed.”
Read more: Holiday 2021: Pent-Up Consumer Demand, Test of In-Store Experience for Retailers
Mastercard projects that retail sales will be up 7.4% year over year between November and December and up 11.1% compared to 2019. Looking at what the financial services company calls the “75 days of Christmas,” running from Oct. 11 to Dec. 24, sales are expected to increase 6.8% versus 2020 and 11% on a two-year stack.
No More ‘Discount Chicken’
In the second quarter, retailers did not discount items as heavily as they have in previous years, according to Rob Garf, vice president and general manager of retail at Salesforce, as inventory challenges started to creep in — a trend that is expected to continue even as holiday shopping picks up.
“We often talk about ‘discount chicken,’ the game between retailers and consumers where retailers go into every holiday season with a discounting and promotional plan … and they typically do deeper and deeper discounts as the holiday season goes on,” Garf said. “But we actually think, for the first time since I’ve been tracking this, ‘discount chicken’ might not necessarily be won by the consumer, and retailers will be able to hold onto those average ticket prices.”
Sadove similarly told Webster that deep discounts are likely off the table this year, though some promotions are to be expected, since customer acquisition costs are going up and “a modest discount is an effective acquisition tool.”
“It’s not surprising that you’re seeing some degree of promotion, but it’s very controlled,” he said. “This isn’t deep discounting.”
Increased supply chain costs are expected to add an additional $223 billion to the cost of goods due to a shortage of workers and raw materials, as well as bottlenecks at ports and a lack of logistics capacity.
Also see: Retailers Set for Another Unprecedented Holiday Season
BNPL Is Benefiting
With consumers starting their holiday shopping earlier, one winner this holiday season could be buy now, pay later (BNPL) providers, which have already had a big year by many measures. Over the past 12 months, 29 million Americans, or 11% of consumers, have used the payment method, according to PYMNTS research conducted in collaboration with Amazon Web Services (AWS). That includes nearly 13% of consumers who make between $50,000 and $100,000 and over 12% of those who make more than $100,000.
You may also like: 29M US Consumers Used BNPL in the Past 12 Months
Salesforce projects that 8% of all orders globally will utilize BNPL going into the holidays, nearly double the share seen last year. Brad Lindenberg, co-CEO of Zip U.S., told PYMNTS in a recent interview that the end of 2021 could be the biggest quarter his company has ever seen.
“There’s been a lot of pent-up savings, and people who’ve been receiving stimulus and also been locked up at home really had a real opportunity to go out and shop,” he said. “And you couple it with the awareness of our product — there’s been a huge shift in awareness of this category — and consumers are now beginning to utilize our services as their primary card and their primary way to pay.”
Read more: Zip CEO Says to Get Ready for a Big BNPL Holiday Shopping Season
Walmart has said it won’t offer its typical holiday layaway program this year, instead directing customers to use its BNPL option through Affirm. Earlier this year, Amazon also partnered with Affirm to offer the payment method to consumers.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More