2021 Deloitte holiday retail surveyHoliday shopping: Establishing the next normal October 2021Copyright 2021 Deloitte Development LLC. All rights reserved. | 2ContentsExecutive summary 3Key findings 4Consumer sentiment 6Consumer behavior 14Supply chain 22Inflation 30Copyright 2021 Deloitte Development LLC. All rights reserved. | 3Executive summaryINTRODUCTIONFor 36 years, the annual holiday survey has helped gauge consumer sentiment heading into retails crucial months. This year, we wanted to get a more holistic view of the changing landscape and added a new retail executive survey of 30 retail buyers, along with our survey of more than 4,000 consumers. In addition, a new holiday travel survey may shed light on how people plan to socializeaway from home this year.As we enter the second holiday season during the pandemic, the question on everyones mind is will the holidays ever return to normal?Some trends seem to be heading that way. Improving anxiety around health and safety may have aided overall average spend (up 5% YoY). Some consumers expect to incorporate more in-store shopping this year, while others are venturing out to entertain, socialize, and travel, boosting spend on experiences (+15% YoY), echoing expectations found in our holiday economic forecast.But its clear a bounce back to pre-pandemic trends is not likely in the works. Digital platforms that consumers tried during the pandemic for safety reasons have become habits because of the conveniences they offer. And consumers plan to start shopping earlier than in the past two years because of concerns around inflation and supply chain constraints, an opportunity for retailers, as early shoppers tend to spend more.Perhaps the most sobering pandemic trend is that low-income groups continue to suffer. Their average holiday spend decreased more than 20% YoY, while high-income spend is on the rise. The executives we surveyed, however, were optimistic that consumers were ready to embrace the holidays again and were eager to find opportunities within the evolving pandemic challenges. Retailers that welcome the next normal and meet the shifting needs of the consumer may be well-positioned for a strong holiday period and beyond.Rodney R. SidesVice chairman and US leaderRetail & Distribution Deloitte LLPStephen RogersExecutive directorConsumer Industry CenterDeloitte Services LPstephenrogersDBryan FurmanRetail sector specialistRetail & DistributionDeloitte Services LPLupine SkellyResearch leaderRetail, Wholesale & DistributionConsumer Industry CenterDeloitte Services LPCopyright 2021 Deloitte Development LLC. All rights reserved. | 4At-a-glance: Key findingsDELOITTES 2021 HOLIDAY SURVEYSentimentAll is bright for high-incomeConsumer behaviorDashing throughthe storesSupply chain Delivery time is frightfulInflationIts beginning to look a lot like markupsConsumers: Average spend up 5% YoY boosted by a return to experiences (up 15% YoY), but gains largely driven by high-income groupsConsumers: Some pandemic behaviors are sticking with 62% of spending expecting to occur online, while a decrease in anxiety levels motivates some to return to storesConsumers: Concern for stockouts (75%) and shipping delays will likely motivate shoppers to start earlier YoYConsumers: 68% expect higher prices this season, hitting lower-income groups especially hardRetail executives: Upbeat outlook, with seven in 10 expecting consumers to spend more YoYRetail executives: Betting on consumers returning; holiday inventory orders up single digits for four in 10, up double digits for three in 10Retail executives: 6 in 10 worried about receiving holiday orders on time; majority expect holiday shopping to start one to two weeks earlierRetail executives: Consumers should expect higher prices, as depth of promotions wont negate higher prices (five in 10)Copyright 2021 Deloitte Development LLC. All rights reserved. | 5Key findingsDELOITTES 2021 HOLIDAY SURVEYSentiment: All is bright for high-income Consumer behavior: Dashing through the storesnull Overall holiday spend up YoY 5%, with average spend at $1,463 (versus $1,387 in 2020) largely driven by higher-income householdsnull Household financial situations steady, with 78% in similar or better shape than last year (versus 71% in 2020)null While higher-income households are driving the growth in average spend, lower-income represents 65% of the total non-spenders this holiday seasonnull Retail executives view: 73% expect shoppers to spend more or significantly more this holiday seasonnull More consumers venturing out as health and safety anxiety decreases (40% consumers anxious versus 51% in 2020), aiding spend on experiences (up 15% YoY)null Engagement with digital platforms remains high, and 62% of spend is expected to occur online, while curbside pickup and BOPIS remain popular for convenience aspectnull 28% say they plan to use social media this holiday, primarily for researching productsnull Retail executives view: 40% expect double-digit online channel growthSupply chain: Delivery time is frightful Inflation: Its beginning to look a lot like markupsnull 75% shoppers concerned about stockouts, especially with electronics, accessories, toys, and hobbiesnull Four in 10 will likely start their shopping earlier this year, citing potential shipping issues (49%) and stockout issues (47%) for the shift in timingnull 68% shoppers plan to shop before Thanksgiving (versus 61% in 2020) due to stockout concernsnull Retail executives view: 64% concerned about receiving inventory in time for the holidaysnull 39% of consumers (versus 20% in 2020) say they may spend more this year due to higher prices in generalnull Of those that plan to spend less this holiday season, 50% blame it on higher food costs (versus 31% in 2020)null 60% consumers say “getting a great deal” is the top attribute for retailer selection but higher prices and fewer promotions mean deals may be harder to findnull Retail executives view: 53% expect retail product prices to increase this holiday season; 57% expect flat or lower promotional activity YoYConsumer sentimentAll is brightfor high-incomeCopyright 2021 Deloitte Development LLC. All rights reserved. | 7Financial situations stabilize and retail executives plan for a comebackQuestions: (1) “In your opinion, what is your overall outlook for the U.S. economy in the year 2022 compared with today? Would you say it will likely?” Percentage of Improve modestly/significantly and remain the same; (2) “Thinking about your households current financial situation, would you say it is” Percentage of A lot better than/Somewhat better than/The same as it was last year at this time.Note: Sample Size (N)=4,315.Retail Executives View: Source: Deloitte Retail Buyer Survey - Holiday Season 2021 (September 2021), Sample Size (N)=3067%RETAIL EXECUTIVES VIEWexpect the economy to improve or remain the same in 2022.1(versus 73% in 2020)78%have a similar or better household financial situation.2(versus 71% in 2020)STATED THAT HOLIDAY ORDER VOLUMES GREW DOUBLE-DIGIT YoY33%ACHIEVED SINGLE-DIGIT YoY GROWTH43%Copyright 2021 Deloitte Development LLC. All rights reserved. | 8Spending plans approach 2019 levelsQuestions: “How will your total holiday spending compare with last years holiday season?” and “What percentage of your holiday shopping spend would be through the following payment modes?” Percentage through Credit Card(s).Note: Sample size (N)=4,315.Retail Executives View: Source: Deloitte Retail Buyer Survey - Holiday Season 2021 (September 2021), Sample Size (N)=30Shopper spending intentions(% holiday shoppers)10%13%20%49%49%55%42%38%25%2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Spend more Spend the same Spend lessRETAIL EXECUTIVES VIEWEXPECT SHOPPERS TO SPEND MORE OR SIGNIFICANTLY MORE THIS HOLIDAY SEASON73%42%of the total holiday spend will be financed using credit cards (versus 38% in 2020)Copyright 2021 Deloitte Development LLC. All rights reserved. | 9Average holiday spend benefits from consumers returning to experiencesRETAIL EXECUTIVES VIEW“WE SEE AN OPPORTUNITY THIS HOLIDAY SEASON AS CONSUMERS RETURN TO ENTERTAINING AND IN-PERSON GIFTING.” Mass merchant executive$1,463$927 average retail category spend holds steady even with uptick in socializing away from home (versus $922 in 2020)Average expected holiday shopping spendQuestion: “How much do you expect you will spend during the upcoming year-end holiday season on each of the following items?” Notes: Sample size (N)=4,410 (2019), 4,012 (2020) and 4,315 (2021). All dollar values are in US dollar.*Experiences include entertainment at home and socializing away from home such as travel, hotels, restaurants, concert tickets, etc.Retail Executives View: What are the top two opportunities you foresee going into the holiday season for your company? (N=30) Open text responses categorized into broad themesCopyright 2021 Deloitte Development LLC. All rights reserved. | 10Higher-income shoppers drive uptick in overall average spendQuestion: “How much do you expect you will spend during the upcoming year-end holiday season on each of the following items?”Note: Sample size (N)=4,400 (2019); 4,013 (2020); 4,315 (2021). Split of sample by income: Lower-income (Less than 50K) 36% (2019), 34% (2020), 34% (2021); Middle-income ($50K$99K) 31% (2019), 31% (2020), 31% (2021); Higher-income ($100K or more) 34% (2019), 35% (2020), 35% (2021).Average expected holiday shopping spend (20192021)by income$672$1,302$2,554$1,496$688$1,152$2,279$1,387$536$1,187$2,624$1,463Lower-income (Less than $50K) Middle-income ($50K$99K) Higher-income ($100K+) Overall average2019 2020 2021-22%+15%Low-income struggles to recover, and inflation could be additional pressureCopyright 2021 Deloitte Development LLC. All rights reserved. | 11Many low-income shoppers sitting out the seasonQuestion: “How much do you expect you will spend during the upcoming year-end holiday season on each of the following items?”Notes: Non-spenders” are shoppers whose overall shopping spend = $0. Sample size (N)=4,315. All dollar values are in US dollar.Proportion of non-spenders in each income group% holiday shoppers4.2%2.9%4.9%11.5%2018 2019 2020 2021Respondents who do not plan to spend this season% holiday shoppersHigher-income$100K+12%Lower-incomeLess than $50K65%Middle-income$50K$99K23%Copyright 2021 Deloitte Development LLC. All rights reserved. | 12As Americans return to experiences, just under half will travel this holiday season, and nearly twice as many will drive as flySource: Deloitte 2021 Holiday Travel Survey, N=6,512Question: What activities are you planning to partake in during the 2021 holiday season (between Thanksgiving and mid-January 2022)?; Source: Deloitte 2021 Holiday Travel Survey, N=2,759Question: How many trips will you be taking this holiday season?; Across all your travels this holiday season, what travel products will you use?37%54%60%70%Take a flightStay in paidlodgingStay with friendsor familyDrivingof those planning to travel:Share of Americans traveling this holiday seasonTraveling in holiday season 2142%Not traveling in holiday season 2158%Copyright 2021 Deloitte Development LLC. All rights reserved. | 13Average spend at retail sees uptick from clothing and accessoriesQuestion: “What percentage of your total holiday budget, excluding entertaining at home and socializing away from home spend do you expect to spend on the following categories?”*Category-level averages are based on the no. of shoppers who plan to purchase the category. The sum of category averages would not equal the average retail spend ($927) which is calculated based on the no. of shoppers who plan to purchase at least one category.Sample size (N)=3,836. All dollar amounts are in US dollars.$275 $217 $263 $220 $180 $177 $127 $102 $304 $243 $235 $220 $193 $187 $156 $107 Clothing andaccessoriesElectronics andacessoriesGift cards andotherFood andbeverageHome andkitchenToys andhobbiesHealth andwellnessPet2020 2021Share of total holiday 22% 14% 17% 14% 8% 13% 8% 5%spend at retail% of shoppers 77% 61% 76% 66% 45% 76% 55% 46%purchasingAverage spend by category*Largest gains in health and wellness, clothing, and electronics driven by the higher-income groupConsumer behaviorDashing through the storesCopyright 2021 Deloitte Development LLC. All rights reserved. | 150.00.51.01.52.02.5Change in consumer retail spending by subsector versus 2019 baselineDepartment Grocery Grocery delivery Mass Off-price Overall retailIndex levelSource: Affinity Solutions Inc., Deloitte InSightIQ analysis.Note: Weeks aligned to retail 4/5/4 calendar for YoY analysis; “retail” reflects a representative set of retailers across subsectors; only a few subsectors are depicted in the chart.Across retail sectors, spending meets or beats prepandemic levelsCopyright 2021 Deloitte Development LLC. All rights reserved. | 1658% 60%50% 52%26% -24% 29%26% 32%23% 23%23% 28%22% 24%21% 23%26% 25%21% 21%17% 13%16% 16%26% 18%16% 20%16% 19%55%51%27%26%26%24%22%21%19%19%18%17%15%14%14%13%Online-only retailersMass merchantsLocal independent storesOff-price storesTraditional department storesWarehouse membership clubsBookstoresElectronics, office supply, and computer storesSpecialty beauty storesSupermarkets or grocery storesHome improvement storesPet products storesSpecialty arts and crafts retailerSpecialty clothing storesOutlet stores or centersDollar storesOnline and mass merchants continue to lead, while supermarkets and specialty clothing likely to experience pullbackQuestion: “At which of the following types of retailers will you likely shop for holiday gifts (retailer in-store and websites)?”Note: Sample size (N)=4,315.2020 2019Copyright 2021 Deloitte Development LLC. All rights reserved. | 17In-store shopping regains some lost ground, but digital adoption now a holiday habitQuestion: “What percentage of your total holiday budget do you expect to spend .?”Notes: Other retail channels (e.g., catalogue or direct mail promotion) not included in the chart (share of spend=3% in 2015; 5% in 2016; 7% in 2017; 7% in 2018; 5% in 2019; 8% in 2020; and 5% in 2021). Sample size (N)=4,315. All dollar amounts are in US dollars.Retail Executives View: Source: Deloitte Retail Buyer Survey - Holiday Season 2021 (September 2021), Sample Size (N)=30Share of spend: Online versus in-storeRETAIL EXECUTIVES VIEWEXPECT DOUBLE-DIGIT ONLINE CHANNEL GROWTH40%OnlineIn-storeCopyright 2021 Deloitte Development LLC. All rights reserved. | 18As anxiety eases, consumers return to browsing physical stores 5.96.26.35.76.97.05.26.62014 2015 2016 2017 2018 2019 2020 2021Average number of physical stores visitedQuestion: “How many individual retail stores or websites/apps do you expect to visit when purchasing holiday gifts over the next several months?” Number of physical stores visits; “How far will you travel to purchase a gift from a retailer?”; “I prefer shopping at local retailers over national retail chains” Percentage Strongly a