Woman sitting on her couch on her phone in an apartment decorated for Christmas.
Retailers have noticed that just as Americans embraced video livestreams for things like work meetings and family reunions, they've also been using them to shop. — Getty Images/AleksandarNakic

Why it matters:

  • Holiday spending is expected to be strong this year, but with more sales channels than ever, retailers have to be smart about how they connect with customers.
  • Retailers are embracing new technologies this holiday season, including livestream shopping videos and buy now, pay later (BNPL) platforms.
  • Conscious consuming is a top trend this year, but shoppers also are looking for deals.

As they head into the most important shopping weeks of the holiday season, America’s biggest retailers are responding to changing consumer behaviors.

Business insights on when, where and what consumers are expected to buy this holiday season are driving retailers to adopt new tactics, and revisit some old ones.

The good news for retailers is that spending is expected to top last year’s 8.3% growth, despite supply chain challenges and possible merchandise shortages.

Sales during Thanksgiving week are expected to be particularly strong, with the latest Mastercard Spending Pulse survey predicting 10% growth over last year.

The bad news is that there are more sales channels than ever competing for shoppers’ attention, making it more important for retailers to stay on top of trends.

Here are the trends big retailers are betting on to drive sales this Black Friday shopping weekend and throughout the holiday season:

Virtual livestream shopping in your living room

Retailers have discovered that just as Americans embraced livestreaming videos for everything from work meetings to family reunions during the pandemic, they are using them to shop.

Retailers as varied as Walmart, Saks Fifth Avenue, Clarks Shoes, Bloomingdale’s, Macy’s, Kohl’s and Nordstrom have held successful livestreaming shopping events this year, and they and others are doubling down on them this holiday selling season.

Saks in early November said it will hold a dozen or more holiday-themed live shopping events in November and December, with celebrity hosts who can interact with viewers via chat and help them purchase merchandise featured in the live events.

“This is another example of how we are meeting customers where, when and how they want to shop with us,” Emily Essner, chief marketing officer of Saks, said, in announcing the live events.

Meanwhile Amazon, which launched Amazon Live in 2019, typically has half a dozen live shopping events running simultaneously on its Amazon Live link, with dozens of new livestreams each day hosted by influencers.

Coresight Research expects that the U.S. livestreaming e-commerce market will total $11 billion this year and grow three-fold over the next three years, to $35 billion by 2024. Less than a third of Americans had watched a shoppable livestream according to a recent Coresight report, making it a huge growth opportunity for retailers.

[Read: 3 Startups Bet on Experiential E-Commerce and Sustainability Trends to Drive Holiday Sales]

Prepping for a store rebound: ‘They enjoy seeing merchandise and being around each other’

While Americans are still expected to do most of their holiday spending online this year – 62% online vs 33% in stores, according to the Deloitte 2021 Holiday Retail Survey – retailers are preparing for a surge of holiday store traffic.

Walmart CEO Doug McMillon, in the retailer’s most recent earnings call, said he believes there is pent-up demand for in-store shopping. As pandemic restrictions eased, he said, “People came back to stores and I think they like stores.

“They enjoy seeing merchandise, being around each other,” McMillon said.

Walmart prepared for the return of in-store shoppers by fully staffing its stores in time for the holiday rush, McMillon said.

The Deloitte survey found that consumers this year plan to visit more stores, are willing to travel further to shop in store and are less worried about COVID dangers connected with brick-and-mortar shopping than they were last year.

[Read: Hyper-Local Commerce and Smaller Brands Benefit From Post-Pandemic Consumer Trends]

While more than a third of consumers told Deloitte they are prepared to spend more for gifts this year due to higher costs, holiday research also shows that a big part of the fun of holiday shopping, especially during the crucial Thanksgiving week and on Cyber Monday, is finding a deal.

Buy now, pay later option is now available virtually everywhere

This is the first holiday season that all of the major retailers have partnered with new fintech platforms to offer easy buy now, pay later (BNPL) and virtual wallet options — essentially layaway for the digital shopping era.

Buy now, pay later platforms like Klarna, Affirm and Afterpay typically split payments into four equal amounts, making it easier to pay for purchases over time. They also can serve as virtual wallets similar to Venmo and Apple Pay, allowing shoppers to keep track of their purchases and budget their spending, a feature that is driving use by millennials and Gen Z consumers.

Target this year announced it was partnering with two BNPL providers, Affirm and Sezzle, and Macy’s has expanded its partnership with Klarna to allow its use for in-store purchases, as well as online.

Klarna has also partnered with two of the largest U.S. mall companies, Simon Properties and Macerich, to enable purchases at participating mall tenants.

Walmart was an early adopter of BPNL, with a 2019 partnership with Affirm. This holiday season it went further and announced it was replacing its long-time in-store layaway program altogether, with Affirm.

Bloomingdale’s is leaning into its Klarna partnership this holiday season. The BNPL platform is sponsoring Bloomingdale’s Santaland at its flagship New York store, as well as a gift-wrap station featuring custom wrapping paper printed with a personal photo and a “Give Happy Klarna” lounge for relaxing with a holiday treat.

’Tis the season for targeting high spending ‘conscious consumers’

A survey by Sitecore, a software platform that manages customer experiences online, found that more than three-fourths of consumers plan to be more mindful about how they spend their money this holiday season.

Sixty-three percent said they are willing to pay more for locally made gifts, and 62% said they want retailers to offer more products from minority-owned businesses.

The Deloitte holiday report identified conscious consumers as one of the key groups retailers should target this gift-giving season, with 17% of shoppers in that category. Those consumers are expected to spend the most – an average of $2,228 during the season — and are more likely to use social channels and prioritize shopping locally and sustainability, Deloitte said.

Kohl’s is responding to that trend with a holiday campaign it is calling “Give With All Your Heart,” and a pledge to donate $8 million to approximately 150 U.S. nonprofits. It is selling Kohl’s Cares Collection, classic children’s books paired with a plush toy, and giving all of the earnings to nonprofits that support the health and wellness of children and their families.

In addition, it’s using a TikTok challenge and other social media engagement intended to inspire shoppers “to share purposeful and meaningful gifts with loved ones,” according to the campaign announcement.

Target, meanwhile, has expanded its partnership with sustainable cleaning and housewares brand Grove Collaborative with a limited-edition holiday collection called Sparks of Joy, featuring holiday scents and a candle.

Etsy and Amazon are betting on artisanal fare to drive gift sales.

Etsy’s holiday campaign, “More than a Gift,” features ads on social media showing how handcrafted and personalized gifts strengthen human connections.

Amazon is promoting its Handmade merchandise via a partnership with actress and screenwriter Mindy Kaling, spotlighting her selection of co-designed items from artisans around the world.

Despite inflation and shortages, deals still matter

While more than a third of consumers told Deloitte they are prepared to spend more for gifts this year due to higher costs, holiday research also shows that a big part of the fun of holiday shopping, especially during the crucial Thanksgiving week and on Cyber Monday, is finding a deal.

Deloitte found that 60% of consumers said getting a great deal is the top reason why they pick one retailer over the other.

Walmart, Target and Amazon, the top three competitors in the fight to draw shoppers with low prices, all started offering holiday deals earlier than ever. Walmart said it plans to absorb price increases rather than pass them on to consumers, to maintain a low-price advantage.

In this year’s annual National Retail Federation consumer survey, 58% of respondents said deals that are “too good to pass up” are their top motivation for shopping between Thanksgiving and Cyber Monday.

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Published November 22, 2021