In October, most people are shopping for Halloween costumes. But Nordstrom wanted customers to start thinking about a different holiday.
On October 14, the retailer emailed customers to encourage them to begin their holiday shopping soon, warning that “the hottest gifts may sell out on our site and that shipping could take longer than we’d all like.”
While Nordstrom’s tone wasn’t exactly ominous, the message was clear. The ongoing supply chain snarl — which began in the earliest days of the pandemic and hasn’t let up since — is threatening this season’s holiday cheer with shipment delays and product unavailability.
Nordstrom is one of many brands pushing shoppers to buy their holiday gifts early this year. It dropped its annual gift guide October 4 — nearly a month earlier than it did in 2019. Meanwhile, brands like Gap and Pottery Barn are already firing up holiday messaging on their websites, and Amazon, Target, Kohl’s and PacSun all started holiday promotions in October.
They’re doing so with good reason: already, dozens of brands, including Lululemon, Under Armour, Everlane and Nike have faced supply chain headaches. And complications including Chinese power cuts in the midst of an energy crisis and factory closures in Vietnam due to a Delta variant outbreak mean delays may get worse.
“There are truly boats sitting with product, longer than anticipated,” said PacSun president Brie Olson. “Between product shortages and delivery delays, we’re activating in whatever way we can to encourage early shopping.”
But brands that want to entice shoppers by launching sales early risk a hit to their bottom line; putting products on sale for three months isn’t ideal for a brand’s margins or image. To spread out the holiday season without doing so, experts recommend brands stagger promotions, activate holiday messaging on social media and invest in technology that will drive loyalty.
Supply Chain on Their Minds
The effects of the pandemic have pushed discussions around supply chain into the mainstream, with shipping delays and materials shortages dominating global headlines and conversation.
“There’s an understanding and awareness about shipment delays that wasn’t there in the past,” said Matthew Merrilees, North American chief executive of Global-e, an e-commerce solutions company. “You have the entire consumer base trying to get more prepared and organised this year, so brands need to shift to this consumer behaviour and be preparing earlier too.”
Shoppers are expected to spend $1.3 trillion this holiday season, an increase of about eight percent from 2020, according to Deloitte. But anxiety around actually receiving product has consumers opening their wallets earlier than ever. Some 75 percent of consumers now say they plan to do their holiday shopping early, according to a survey from the International Council of Shopping Centers, a trade association.
Nobody wants weeping children on Christmas because their toys didn’t arrive in time.
“Nobody wants weeping children on Christmas because their toys didn’t arrive in time,” said Sonia Lapinsky, managing director of the consulting firm AlixPartners.
Big retail brands have even gone the extra mile to reassure shoppers they’ll get their gifts in time. In a press release issued earlier this month, Walmart outlined steps it was taking to “navigate the hurdles and minimise disruption, including hiring 20,000 new supply chain positions. Days later, Target issued a similar statement about how it was working late into the night to get product moving out of congested ports.
With nearly every shipping carrier expecting delays in the coming weeks, Merrilees said it was crucial for brands to invest in a multi-carrier approach, even if it adds additional costs.
“Having logistics taken care of will make all the difference in the consumer experience,” he said.
Lapinsky added that brands with retail locations should be encouraging consumers to use options like buy online, pick up in-store — often referred to by its acronym BOPIS — to avoid packages getting lost in the mail. For retailers, BOPIS has the added bonus of bringing more foot traffic to stores.
Twillory, a New York-based independent menswear brand, is investing in a last-mile shipping strategy for the holiday season to ensure orders arrive on time. The brand is using UPS SurePost, a service that sees UPS handle the early stages of delivery before handing a package off to a last-mile delivery company.
The service adds about $5 to the price of shipping each package, “but it’s worth it because it’s an extra assurance to customers that they’re going to get their stuff,” said Twillory co-founder Eli Blumstein.
Christmas in October
While consumers are more inclined to shop early this year, retailers are still giving them a push in that direction. While premature holiday excitement may make some consumers cringe, Lapinsky said brands should start holiday marketing on social media as soon as possible and invest in targeting customers who are already doing their holiday shopping — especially considering the battle for ad spend is expected to get heated.
Brands like Twillory intend to take out at least double the amount of social media ads.
It costs more at this time of year because everyone is spending to acquire the same customers, but it’s also the easiest time of year to grab shoppers’ attention.
“It costs more at this time of year because everyone is spending to acquire the same customers, but it’s also the easiest time of year to grab shoppers’ attention,” said Blumstein.
Twillory will kick off its holiday promotions on Nov. 1, a few weeks earlier than previous years. But to avoid the financial repercussions of long-term discounts, Blumstein said that the company will choose one category to put on sale every week throughout the holiday season rather than discount its entire assortment.
“To have a Black Friday sale the whole month can be a real hit to the bottom line, so this is a happy medium,” Blumstein said. “Staggering deals also keeps up the excitement the entire season.”
PacSun is also having holiday promotions throughout October, November and December. Olson said the company is also set to drop collabs like ASAP Rocky X Vans and Fear of God Essentials coming up, with the idea to use limited-edition products to fuel consumer appetite during the holiday season. The drops, Olson added, are not a part of PacSun’s promotions, which help with margins when the rest of the brand’s products are on sale.
Ulta Beauty also kicked off the holiday season earlier this month. The beauty retailer moved its best-selling products to the front of its stores so shoppers can start browsing as soon as they walk in, said Kecia Steelman, the company’s chief operating officer.
Like many beauty retailers, Ulta is also highlighting items that feature a gift with purchase, which it hopes will amplify the idea of shopping for oneself during the holiday season in its marketing.
“We’re going to be shouting loud and proud to be excessive and shop more for you and your loved ones,” Steelman said. “Not only can you give a little, but get a little for yourself too.”
Beyond those strategies, brands should also be investing in loyalty-driving technology and more attractive rewards programs, added Lapinsky. Walmart just announced it was testing a shopping SMS service, Walmart Text-to-Shop, “to make the shopping process simple and convenient” — just in time for the holidays.
“The retailers that will see the wins are the ones that are making investments and connecting with [consumers] in every way possible,” said Lapinsky. “There are dollars to be had if you can engage with customers early on.”