Though still in the midst of this year’s holiday trends, we’re already seeing signs of changing consumer preferences."

As the end of year is in sight, it’s hard to believe the holidays are upon us. Even as retailers are in the throes of the holiday shopping season, new product trends and supply chain disruptions mean it’s more important than ever to look ahead to the 2022 holiday season.

Whether you’re a seasoned retailer with an extensive holiday offering or a retailer looking to expand next year’s holiday offer, now’s the time to plan strategically.

Making an Emotional Connection

When retailers make space for new, fun and creative seasonal assortments, they do more than offer variety. They offer an emotional connection their customers may not have with everyday items. Holiday assortments play into consumers’ desire for seasonal indulgences and their excitement to celebrate the season.

Through unique holiday offerings that are merchandised and marketed consistently in stores and online, retailers can develop a much deeper connection with their customers during the holidays than they can during shoppers’ normal weekly grocery run. Consider the massive expansion of pumpkin spice and how it has transcended across categories. Consumers have developed an emotional connection to this flavor profile and have accepted the product innovation built around it.

Smart retailers play into shoppers’ anticipation of holiday assortments and the treasure hunt of finding these products, creating an opportunity for shoppers to become emotionally invested in not just what they buy but the experience of purchasing it. A prime example is the growth of products based on the holiday Advent calendar. Advent calendars have been around for decades, originally marketed to children without much innovation or expansion. But best-in-class retailers saw an opportunity and inflated their holiday assortment with calendars filled with toys, socks and snacks — even beer, wine and dogs treats. These retailers are known to have lines of shoppers eagerly waiting for stores to open, all for the thrill of scoring one of these coveted calendars. These unique, limited-time items offer a special and specific opportunity to communicate with customers by promoting their upcoming arrival via the retailer’s app, social channels and email marketing campaigns. The result? An increase in seasonal traffic, sales, engagement and loyalty. The halo effect can positively impact purchasing behavior and customer loyalty year-round.

Leaning Into New Trends

Though still in the midst of this year’s holiday trends, we’re already seeing signs of changing consumer preferences. For instance, we expect a shift in home goods and décor, as the popularity of bright colors turns in favor of simplified, toned-down hues. The farmhouse trend dominating decorating for the past several years will be replaced with Tudor-style décor.

Shifting preferences like these offer retailers the opportunity to not just lean into new products but to define how they want to engage through balancing traditional holiday offerings with new and emerging items. Consumers have given retailers permission to go beyond a basic product offering of scented pinecones and cardboard displays featuring holiday foods. Rather, they expect retailers to put their own stamp on holiday assortments and displays, creating points of differentiation by identifying unique and new items that meet their needs across food and general merchandise and showcasing them in eye-catching displays.

Prepping the Holiday Assortment

Unlike year-round goods, the launch of seasonal products is specifically impacted by the need to time their presence with the holiday shopper’s purchasing behavior. We’re seeing consumers begin their holiday shopping earlier and earlier. A full 70% of consumers intend to start holiday shopping in November this year, according to Daymon proprietary research.

Best-in-class retailers plan their seasonal products 10 to 12 months ahead of the targeted season. Those that are overhauling their seasonal assortment game should plan even earlier.

Ongoing supply chain challenges are expected to continue and potentially impact the lifecycle of next year’s holiday items. Assessing what’s being purchased now, and how and where it’s being purchased, will be key to 2022 planning. This is an important step in developing and better executing a winning holiday assortment.

Estimating SKU Quantities

Retailers should also analyze the success of their and other retailers’ prior seasonal assortments by using point-of-sale data and syndicated data that reveal volume demand, purchase frequency and the buying timeline. Nurturing close partnerships with manufacturers early in the planning process will go a long way in understanding how well products will likely be accepted by shoppers, which creates opportunity to collaborate on volume forecasts.

Manufacturers accepting the risk of over- or underproducing and retailers risking over- or underordering is the first step in demand planning. Limiting production minimizes the initial risk but lowers sales potential, while a generous production forecast will have greater onset liabilities but also greater sales potential. Narrowing the gap between manufacturers’ under- or overproduction and retailers’ under- or over-ordering will result in the right mix of risk and reward.

Forecasting against new, untested trends can be especially difficult, so retailers should leverage sales and insights partnerships when planning now for a successful year-end next year.

Assessing Opportunities and Challenges

Developing seasonal assortments is just like developing sales of any other product, with its own rewards and challenges. For instance, customers love returning each year to retailers known for bringing in unique and exciting holiday assortments, especially if a retailer garners exclusivity on certain items across categories. But seasonal assortments often require manufacturers to make bigger investments in packaging design for a shorter selling period, leading to smaller packaging print runs that may increase the cost per unit. However, when manufacturers can offer successful seasonal SKUs year over year, profits increase over time.

As we look forward to 2022, now is the time to identify future trends, observe shopper behavior and ask consumers what they want more of in next year’s holiday assortment. By focusing on preparation, giving a keen eye to sales performance, assessing the challenges and opportunities, and developing a strategic marketing plan, retailers can start setting themselves up for 2022 holiday season success even before they take down this holiday’s tinsel.

Michael Taylor
President, Global Customer Solutions
Advantage Solutions

Michael Taylor leads Advantage Solutions’ global retailer-focused businesses and teams, including Daymon, SAS Retail Services and other retailer experiential marketing services, plus brand strategy and marketing agencies inKLOUT, Hatch and Promopoint. He also leads Advantage’s Customer Collaboration Center of Excellence.