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Double-digit holiday sales increase is retailers ‘to lose,’ says AlixPartners

Holiday sales are poised for one of their biggest increases in decades.

Sales are forecast to increase 10% to 13% this holiday season over last, which would make this the strongest holiday period since 1999, according to global consulting firm AlixPartner’s 2021 US Retail Holiday-Outlook Survey. The firm found that 88% of consumers plan to spend the same or more this holiday season, up 12% from last year.

The AlixPartners forecast is even more bullish than the recent one by Deloitte that projected holiday retail sales are likely to increase between 7% and 9% in 2021.

Even the recent rise of the COVID-19 delta variant isn’t having much of an impact on consumers’ holiday spending plans. Only 12% said they plan to spend less—the same amount who said the variant will decrease their spending. Last year, 24% of consumers said they expected to spend less.

Our message to retailers is: ‘This holiday season is yours to lose,’ said Joel Bines global co-leader of the retail practice at AlixPartners and a managing director at the firm. “There’s unprecedented pent-up demand out there, consumers have lots of money in their pockets, in part due to recent government programs, and even the rise of the delta variant, while certainly concerning, doesn’t seem poised to put a damper on things, thanks in part to the big increases in online shopping this past year.”

However, this doesn’t mean, however, that retailers won’t face some big challenges this season, Bines added. These include ironing out supply-chain disruptions, dealing with increased logistics and delivery costs, dealing with currently high inflation rates, and dealing with increasing labor costs.

“If not handled correctly, any one of those things could quickly derail things for retailers this season,” he cautioned.

As retailers ramp up for the holiday season, they should focus on ensuring that they have robust omnichannel-fulfillment capabilities,” advised David Bassuk, also global co-leader of the retail practice at AlixPartners and a managing director at the firm.

“That means things like things like optimizing inventory across stores and distribution centers, using stores for online fulfillment as mini-distribution centers, and fully leveraging concepts like BOPIS [buy-online-pick-up-in-store] and curbside pickup,” he explained. And, of course, all those things need to be underpinned by integrated—and well-informed—analytics.”

Shopping Early
Additionally, 53% of consumers said plan to start their holiday shopping before Halloween (October 31), up 4% from last year’s survey.  Forty-three of consumers plan to do the majority of their holiday shopping online. But 57% said they plan to visit physical stores this season — up7% from last year — which is perhaps another indication of power of pent-up demand now, the study said.

“Consumers will be showing up to shop this holiday, but the power has shifted away from retailers to consumers,” said Alexa Driansky, a senior VP in the retail practice at AlixPartners and one of the contributors to this year’s forecast and survey. “With a quick internet search, consumers will switch to whichever retailer has the product in stock, find a good price and get either delivery or pick-up fast and for free. Retailers will need to be more agile and resourceful than ever to make sure it’s them and not their competition that comes out as the winners this season.”

The 2021 AlixPartners US Retail Holiday-Sales Forecast is based on proprietary AlixPartners methodology and was first instituted in 2012. The period it encompasses is October 1 through December 31 for each year cited. All its numbers are seasonally adjusted, and it covers core retail sales, which exclude motor vehicles, fuel, and restaurants and drinking establishments.

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