Bloomreach Commerce Pulse: Holiday Shoppers Were Lackadaisical This October
By Brian Walker
Bloomreach Commerce Pulse: Holiday Shoppers Were Lackadaisical This October
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Note: Our Bloomreach Commerce Pulse monthly articles explore the most interesting Bloomreach Commerce Pulse results and provide key insights for e-commerce professionals and industry observers looking to benchmark and understand what is happening in the market. They reveal current trends and help businesses to fully understand the digital commerce marketplace.
Despite the hype over holiday shopping kicking off early this year, consumers are slow to respond.
Amid late summer temperatures and Halloween central on the minds of many, October has become the month when holiday shopping really starts to get into gear. And certainly this year there were indications that retailers and brands would try to pull even more holiday demand forward into October to mitigate a host of challenges, including supply chain challenges and labor shortages. However, the results from October indicate that consumers are yet to respond.
In North America, online sales were up 18.77% year-over-year (YoY) — a healthy number most years, but perhaps not this one. That is far off the pace for the year, with sales up 37.94% year-to-date exiting September. What’s particularly interesting is that traffic year-over-year was down 10.22% for October YoY… so then, what is driving the uptick in sales?
The sales increase in North America’s October results was really driven by average order size being up 25.92% YoY. This may be a reflection in part from less promotion and discounting this year compared to the many years prior where sales and promotions were a relied upon tactic. Retailers and brands are less promotional this year for two key reasons. First, they have less inventory to work with than they may have wanted so are discounting less. And second, they are experiencing significantly higher operations, supply, and labor costs which they are reluctant to pass on to the consumer at this point in time.
It is also interesting to see the impact of search. While overall traffic was down YoY, search traffic was essentially flat. And sales from search were up 30.15% and average order size of the orders where search was used to find the product was up 32.96% YoY, outpacing the overall in both metrics. This means shoppers in North America aren’t aimlessly searching holiday assortments looking for gift inspiration, but instead, they know exactly what they want and are simply searching for where to find it. And once those shoppers find it they’re buying big.
All of this considered, the sales growth from October was disappointing when compared to what we’ve seen so far in 2021. It seems to hint at a complex holiday season, and may also indicate softening demand from weakening consumer confidence — with inflation worries and post-pandemic malaise mixing with the supply chain issues, and other hiccups shoppers may be less eager to spend with abandon this holiday season. We will have to see.
Europe Hit With Supply Chain Woes and Weak Consumer Confidence
We may live in a globalized world, but our data shows that different regions’ response to supply chain issues and other economic factors varies quite a bit. As opposed to the steady sales growth North America saw this October, UK and European online sales fell 11.21% year-over-year (YoY). And while North American merchants were able to overcome a dip in traffic with much higher AOS and steady conversion rates, that was not the case in the UK and Europe in October.
While traffic was essentially flat in October at -.43%, conversation rate fell markedly at -24.08% YoY across the UK and Europe, while AOS was only up 17.45%. What might be causing the downward trend in conversion rate and sales? The United Kingdom and EMEA as a whole have been experiencing the harsh effects of the ongoing supply chain disruption, transport and fulfillment issues, and a general lack of inventory.
As in North America, merchants face significantly higher costs to operate, ship, and staff their businesses this fall, leading to less promotion and discounting, and further impacting consumers' willingness to buy — and consumers can’t buy if there is nothing to buy.
But it is also a reality that UK and European consumer confidence has also been impacted by rising concerns over inflation and interest rate increases, which may be impacting their spending leading up to the holidays.
Now, let’s dive deeper into some commerce sector data.
Home Improvement Shows No Sign of Slowing
Continuing on a strong growth trend from months prior, home improvement sales were up 55.54% YoY in October and are up 117.97% year-to-date (YTD).
Consumers are continuing to nest and invest in their homes this fall. This could be a natural occurrence as we head into the colder months or as a result of the hot North American housing market driving both the fixing up and settling in of new homeowners. It’s also worth noting that AOS was up in October by 115.97% YoY and 124.02% YTD. While some prices, like the price of lumber, have leveled out after spikes, other costs continue to be above average — especially with supply chain constraints — and thus those home projects cost more to complete.
And in general, the home improvement sector has seen tremendous growth because of the rapid industry-wide adoption of curbside pickup and other online ordering options. Pre-pandemic many shoppers got their home improvement supplies and tools strictly through heading to physical stores, but now that has changed, and home improvement shopping journeys not only start online but now convert online, with the stores playing an important role in fulfilling the products and services important to home improvement customers.
Online Grocery Remains a Fan Favorite
While grocery sales growth remained strong at +19.92% YoY in October, we’re seeing a modest decline in the growth rate as compared to the past few months. Exiting September, Grocery was seeing a +55.42% YoY sales growth rate, so growth has certainly tapered. And while sales growth has tapered, traffic for grocery was up 23.96% year-over-year (YoY), a reasonably strong result.
Interestingly we do not see evidence here in the October Grocery numbers that inflation is having an impact. Online Grocery AOS was down slightly -1.6% and conversion rate also down slightly at -1.69% in October. So while inflation may be on the minds of consumers we can’t see inflationary impacts yet in the online grocery bill.
Apparel Growth Comes in Under Expectations
Though earlier in 2021 we might’ve expected a more rapid bounce-back of the apparel industry as we saw the pandemic come more under control, thus far, gains have been more modest.
In fact, apparel is somewhat underperforming — traffic was down 3.78% YoY in October and sales were more or less flat at -1.92% YoY. Many had predicted — or at least hoped for — more growth via increased sales of clothing stemming from return-to-office and return-to-school, but many businesses have decided to put off re-opening offices and perhaps employees are just not all that interested in dressing up when we do head into the office. Dress codes are just much laxer and new wardrobes may be a bit more unaffordable for some in uncertain economic times.
One interesting data point: average order size (AOS) is up 15.25% YoY — meaning that those who are spending on new clothing are spending more, consistent with the theme of less discounting taking place in the market.
And, an ongoing theme, issues from factory closures and other supply chain challenges are having an impact on apparel inventories as well.
Luxury Numbers Stay Steady
Luxury is one of the industries that each month has shown improvement since earlier this year, after a terrible 2020.
A whole litany of KPIs were up in October for the sector: traffic was up 25.63% YoY and 32.35% YTD and sales were up 48.01% YoY and 28.09% YTD. Conversion rate and AOS are also both trending positively — with conversion rate up 11.37% YoY and average order size (AOS) up 5.78% YoY.
We’re seeing wealthy consumers acquire luxury items for events taking place — like fall weddings and entertainment and social events, as well as early holiday shopping. This growth we’re seen thus far in 2021 can be expected to continue, or even pick up steam, as we head into the holidays as wealthy consumers may be looking to splurge a bit on gifts for others — and maybe themselves as they celebrate a strong economy many of them have benefited from, even if that is not spread evenly across the economy.
B2B Is Showing Renewed Strength This Fall
This October continued a recent trend of strong growth among Bloomreach’s B2B customers.
Sales were up 40.46% YoY in October and up 19.48% MoM versus September of this year. This is a far cry from where we were earlier in the year — and a testament to the fact that businesses are bouncing back and opening up at a rapid pace, driving demand from distributors and manufacturers. Inflationary pressure and overall shortages may be reflected in strong growth in average order size, which was up 46.41% YoY in October while the conversion rate was down 6.79% YoY. That was on top of relatively flat traffic — only up 2.92% YoY.
This strong October rounds out a few solid months of growth for B2B, which sees the sector now reporting a sales increase of 13.82% YTD. That may seem modest, but is a big improvement from where the sector was earlier in the year amidst lock-downs and the impacts that had on B2B customers.
Want More On E-Commerce Insights and Trends?
If you’d like to dig deeper into the data Bloomreach collects — and gain even more insights from our experts, join me and register for Commerce Pulse Quarterly: Holiday 2021 on December 14, 2021. With my special guest Jason Goldberg, we will explore insights in digital commerce and discuss changes in consumer behavior and purchase patterns across the landscape, including a pulse on Holiday 2021. Don’t miss it!
You can also hear more insights about the top trends in commerce today by listening to my podcast, The State of Commerce Experience, which features meaningful discussions with commerce industry experts and thought leaders from around the world. Learn more about that here.
Bloomreach is the leader in Commerce Experience™ — empowering brands to deliver customer journeys so personalized, they feel like magic. Bloomreach Experience, the digital experience platform built for commerce, includes three pillars: Discovery, offering AI-driven search and merchandising; Content, offering a headless CMS; and Engagement, offering a leading CDP and marketing automation solutions. Together, these pillars form the only platform that combines the power of unified customer and product data with the speed and scale of AI-optimization, enabling measurable digital commerce experiences that drive real results. Bloomreach serves over 850 global brands including Albertsons, Bosch, Puma, FC Bayern München, and Marks & Spencer, and powers over $300 billion in commerce annually. For more information, visit Bloomreach.com.