Supply Chain Issues Have Upended 2021 Holiday Shopping.

While we may be fatigued from reading about the ongoing impact of the pandemic, the fact remains that Covid-19 continues to have long-term effects on the way we live, work, and shop. The most recent example of the pandemic’s repercussions is the ongoing global supply chain crisis, which threatens to have major consequences for the holiday shopping season in the U.S. and throughout the world.

Container ships are idling on America’s coasts, and bottlenecks at major international throughways are causing some shipments to be delayed by weeks or more. Taken together with lingering concerns about in-person shopping due to Covid-19, we are heading into a unique period for retailers that could be defined by sudden and major changes in consumer behavior.

To get a sense of how the average consumer is responding to this unpredictable period, I spoke with Monika Kochhar, co-founder, and CEO of SmartGift — an established leader in gift-based e-commerce and data that powers gifting for top global brands. The company’s corporate gifting platform HERO is ​​a robust, powerful, and easy-to-use platform for employee and client appreciation, and sales growth. Monika’s work is dedicated to understanding consumer sentiment and coming up with innovative, data-backed solutions to long-standing challenges.

Leaning on Monika for her expertise in retail trends and shopper behaviors, we dove into the latest reporting from Prosper Insights & Analytics. The October 2021 survey asked just under 8,000 statistically balanced respondents about their plans for the upcoming holiday shopping season, putting this unique year into the context of historical data.

Gary Drenik: Let’s start by addressing the elephant — or container ship — in the room. We’re seeing supply chain issues that we’ve never experienced before on a global level. According to data from Prosper Insights & Analytics, of those Adults 18+ who started their holiday shopping in October or earlier this year, 36.2% did so to avoid missing out on desired options. This is a significant jump from previous years, so how can shoppers make sure that they aren’t disappointed when it comes time to open presents?

Monika Kochhar: It’s true that consumers are going to need a greater degree of flexibility this year than in previous seasons because not everyone is going to be able to find every item on their list. It may be worth adding a bit more detail to the holiday shopping list this year — instead of one must-have item, identifying a few similar products could ensure that every consumer has a Plan B or Plan C if their original gift idea is tangled up in supply chain shortages. A benefit to the kind of gifting that SmartGift enables is that senders can delight the recipient with a digitally wrapped gift and the recipient knows the gift shipment is on its way.

One point worth noting is that consumers know they’ll need to take extra steps this year. This month’s survey data found that nearly half of respondents anticipate experiencing difficulty finding gifts in-store, online, or both. This should be viewed as a silver lining for both buyers and sellers — if you know that the shopping experience might be a bit more complicated this year, you’re less likely to have a bad taste in your mouth if you run into shortages or shipping delays.

Drenik: The supply chain crunch is a more recent phenomenon, but the pandemic is also having longer-term impacts on consumer behavior. Have you noticed any particular changes that you think could be attributed to Covid-19?

Kochhar: At the end of the day, the most important numbers for both shoppers and retailers will be dollars and cents. The data here is clear: Prosper Insights & Analytics found that the average amount spent per consumer on gifts for family, friends, and coworkers declined from a peak of $658.55 in 2019 to $650.47 in 2020 and $648.09 this year. On a per-consumer basis, these may look like small changes, but when you apply them to the tens of millions of Americans doing their holiday shopping this year, these shifts point to significant drops in revenue for retailers large and small.

We don’t know what exactly is placing this downward pressure on consumer spending, but it’s clear that every current microeconomic trend is being shaped by the macro effects of the pandemic. It remains to be seen how the situation will evolve over the next 12 months, and I’ll be fascinated to watch how some of these shifts in behavior fade away or become permanent as we come out of the Covid-19 crisis.

Drenik: Although they varied state to state, last year’s government restrictions undoubtedly led more consumers to do their holiday shopping online. Do you think those changes are here to stay, or will consumers be taking advantage of the opportunity to do their holiday shopping in person?

Kochhar: Last year’s holiday season saw significant increases in online shopping, and the survey data seems to have peaked in 2020. The average consumer did 60% of their shopping online last year, while that figure drops to 57.5% this year. However, both of these numbers are significantly higher than pre-pandemic figures, and it’s likely that this change will be “sticky” even if we’ve fully overcome Covid restrictions in 2022.

Drenik: Finally, let’s talk about gift-giving in the workplace, an area where you have a lot of expertise. Given that many companies still haven’t returned to the office, have there been any changes to the way corporations offer gifts to their employees or clients? Could Covid-19 be the death knell for branded coffee mugs and calendars?

Kochhar: Perhaps unsurprisingly, we have seen a slight decrease in the percentage of people who are buying holiday gifts for their coworkers. Just 30.5% of respondents said they’d be purchasing something for coworkers, the lowest figure recorded since Prosper Insights & Analytics began collecting this data way back in 2004. If I had to guess, I’d say that the social pressure of seeing colleagues on a Zoom call is much less persuasive than sharing a physical workspace five days a week.

On the other hand, employers are more likely to buy gifts for their employees this year because of the great resignation and new workplace realities to keep people motivated and inspired about their company culture. Online platforms for corporate gift-giving offer the recipient the opportunity to choose from a pre-selected list of gifts within a certain price range. That way, if you’re not a coffee drinker or if you prefer to use iCal, you can pass up the classic mug or calendar and choose something that you’ll actually use in the coming year.

Drenik: Thanks for sharing your insights and observations, Monika. Best of luck in finding everything on your list this season!

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