Expect a blockbuster 2021 holiday shopping season. 

The new child tax credit and the historically high household savings rate will likely stimulate consumer spending in the coming months. And U.S. consumer confidence has rebounded sharply, indicating a shift from savings to spending. These signs could bring a healthy holiday bonus to your business. 

To help you make the most of this opportunity, members of our Client Success team shared their recommendations. The team, which works with our merchant partners to increase sales using Affirm’s flexible payment programs, highlighted key trends to watch and offered several tips for capturing more sales during the holiday shopping season.

3 retail trends to watch

After unique challenges in the 2020 holiday season and a burst of spending this summer, these 3 focal points will be priorities for nearly every retail business.

1. Continued growth of online shopping. E-commerce sales are expected to grow to $270 billion this season. That represents 19% of the total holiday sales haul—and it’s 11.3% higher than last year’s total! Many retailers have invested in updating their digital platforms to accommodate the online and omnichannel volume.

“This has been a year of replatforming for so many merchants,” said Paul Frantz, Vice President of Client Success. “They saw what happened last year and are making sure their e-commerce infrastructure is ready for more traffic. Overall we should see website performance improve this year, to the delight of more online shoppers.”

2. Supply chain shortages and rising prices. Last year during the holidays, the PlayStation®5 sold out quickly and disappointed many gaming fans. The scarcity continues today due to a global shortage of microchips, which power many other types of electronics. This and other disruptions in the global supply chain are forcing retailers to rethink their holiday promotions, lest they feature items that are out of stock. The disruptions are also putting pressure on prices. In fact, inflation is expected to rise 4.8% in the next 12 months.

“Merchants don’t have control over these supply-chain and inflation issues,” said Jesse Bussell, Client Success Lead. “So the focus for them is around optimizing pricing and margins with the inventory they do have. Retailers may have to balance their promotions and events with the available inventory to capture more margin.”

3. A longer holiday season. Last year the holiday shopping season began early in October, thanks to major promotions from Amazon, Target, and Walmart, among other major retailers. What’s more, one-third of shoppers expected to complete their holiday purchases before Black Friday. The success of that longer period—which helped shoppers avoid crowds, online shortages, and higher shipping costs—will likely inspire another early start to holiday shopping.

”Some retailers are already doing holiday hiring and adding incentives to work through the holidays,” said Heather Hoeppner, Client Success Director. “So I think we’ll definitely see a longer holiday season—although not quite as long as last year—with promotions and deals rolled out three weeks or so before Black Friday.”

6 tips to help you get ready for the 2021 season

Our Client Success team members recommended the following action items to help your business prepare for the holiday season.

1. Make your digital infrastructure a top priority. Whether or not you have replatformed this year, your website’s health will be essential for success. Schedule a few stress tests before October to verify that your site can handle a surge in shopping activity. If you’re like most retailers, there’s too much riding on holiday sales to neglect your online operations.

2. Offer many payment options at checkout. Today’s shoppers like to use several different payment methods, so make sure you offer many ways to pay in order to boost conversion and customer acquisition. Contactless payment options, for example, have caught on during the pandemic, and cleanliness and hygiene are still among shoppers’ top expectations of retailers. You can also offer split pay, which has become a popular way for shoppers to buy now and pay over time.

3. Widen your product offerings. This can be a way to avoid losses from a supply chain shortage restricting some of your inventory. Think of Cole Haan adding golf and tennis shoes, or Design Within Reach adding gaming chairs. “Expanding your catalogue can be a pivot that lets you go wide rather than deep,” said Bussell, adding that he saw an Affirm partner do this successfully last holiday season amid supply chain challenges.

4. Prioritize free shipping over discounts. Holiday shoppers want a good value, but how they perceive it has shifted. After last year’s widespread postal delays, shoppers ranked free shipping as the best way retailers can deliver value today, according to recent research from Mintel. 

5. Offer “as low as 0% APR promotions” with Affirm. This is another way to deprioritize discounts. Shoppers like 0% APR promotions because they feel similar to discounts: They free up immediate cash flow. These promotions can also reduce friction at checkout and drive more sales for your business, as Bugaboo discovered (+260% lift in AOV). “We know these 0% APR programs work well for Affirm partners,” said Frantz, “but they really deliver when you market them to customers as part of your holiday campaigns.”

6. Deliver a great customer experience. Many people will be eager to enjoy traditional, in-person holiday shopping after missing out last year. Creating a unique, sensory experience with music and snacks can attract some of these shoppers. But many retailers are going further with extras like valet parking and white-glove delivery, so be creative in differentiating your business. At the same time, continue best practices that became popular during the pandemic—like curbside pickup, which has 9,000% more search volume than last year.

“Don’t forget the human touches,” Hoeppner concluded. “Whether it’s your marketing, technology updates, or your physical store, the human side of the holidays and being together will be so important this year. Pay attention to that, because it will help drive success for a lot of retailers this season.”

Learn more how Affirm can increase sales for your business.