Pat Brown, Adobe Vice President of Growth Marketing and Insights, discusses this year's Adobe Digital Economy Index Holiday Shopping Forecast and how the supply chain crunch is already impacting shoppers.
ZACK GUZMAN: As we've been discussing, it's going to be a rather interesting holiday shopping season this year, as both supply chain issues have driven a record backlog in terms of America's ports, and, of course, prices always a question-- dare I say chips as well? Do I need to keep going on? I don't think I need to keep going on here. You get the picture.
There's a lot of questions around what the holiday shopping season is going to look like, and very happy to bring on the experts here at Adobe. Pat Brown is Adobe Vice President of Growth, Marketing, and Insights. He joins us right now. And, Pat, you guys are out with a new report kind of looking at all these issues. And the one that caught my eye, because it's already an issue, out of stock messages rising 172% online retailer.
PAT BROWN: Yeah, that's right, Zack, and happy to be here. We look across a trillion transactions globally to understand what's happening and make some predictions about what we're seeing. And one of the things that popped for us was the huge increase in the out of stock messages, which, like you're saying, is the digital equivalent of an empty shelf-- and so huge increase, 172% year-over-year and actually, over a two-year period, 360% increase-- so really huge increases.
We're seeing that translate into, for the first time ever, entering a holiday season where the online prices are actually elevated relative to the historical trend. Usually we're maybe 10% down as we go into the holiday season. This year, we're actually 5% up. Much of that is driven by the outages and the supply chain challenges.
ZACK GUZMAN: I suppose if there is maybe one thing to look forward to, if we're expecting all those challenges to persist, because that's how backlog works-- they just keep piling on each other here-- still, optimism around cyber week, right? And we see that later on, I guess the expectations around how much prices should come down, despite the fact we're talking about inflation, what should consumers expect this time around?
PAT BROWN: Yeah, that's right, Zack. And I think we're still looking for a huge holiday season, frankly. So the ongoing trend to online purchasing has continued, and last year, we packed three years of growth of that trajectory as a percent of overall, let's look at US retail, into one year-- 33% year-over-year growth last year. This year, we're expecting another 10% on top of that-- so continued acceleration.
One of the things that we're seeing, though, is the shape of the holiday shopping season is just different. We're seeing it more steadier, elevated throughout the entire holiday season, and then still a bump even on that of about 5% around the cyber week. So for example, on Cyber Monday between 8 and 9, we're expecting $2 million a minute in sales online, which is the highest we've ever seen.
So still a huge holiday season. One of the things we will see is discounts may not necessarily be as deep around those holidays because of the supply chain issues. But we do see that driving purchasing behavior that will just extend longer. And one of the things that we're looking for is how much of the purchasing actually continues beyond the holiday season, which may be new driven by the supply chain outages.
ZACK GUZMAN: Yes, I suppose, despite all those issues around supply chain outages and pricing, still expected to see quite a big jump in terms of e-commerce. And I mean, the question is still whether or not the labor is going to be there in some of these physical stores to even deliver on some of those crazy shopping seasons. Of course, it takes a lot of people to make that run efficiently. So what's maybe the expectation around brick and mortar shopping versus e-commerce this time?
PAT BROWN: Yeah, it's a great question. And I think online, you know, people early in the pandemic were really orienting towards shipping to their house. We do see curbside pickup, which declined in the early days of the pandemic, we're expecting that to increase to be about 25% of US online sales. And for the first time ever, we're projecting about a 40% of all online sales just before the holidays, before Black Friday, will be curbside.
So we do expect consumers to be going back to retailers, but potentially in a slightly different way-- leveraging the curbside pickup option. And we're also seeing retailers have in the last two years really developed a capability, both from an online experience, but also that curbside capability. So consumers are really comfortable with that type of purchasing. So we do expect a continued increase of that sort of purchasing, and retailers are ready.
ZACK GUZMAN: Yes, BOPIS-- buy online, pick up in store, one of those acronyms that I think a lot of our viewers have begun to understand here. It sounds like a cousin you forgot existed in the family, BOPIS.
PAT BROWN: Right. Talking about that.
ZACK GUZMAN: Other acronym here, BNPL-- Buy Now Pay Later-- it's been hot, a lot of retailers factoring that into their issues, or maybe a way that consumers will look to spend this time around. I mean, how has that maybe factored in? And what are you expecting to see in people capitalizing on that way to pay?
PAT BROWN: Yeah, that's a really interesting one that we've been tracking. And I think this is as consumers or as retailers and online retailers, you know, they learned early in the pandemic, we had to make a digital experience that was amazing. And that included creating opportunities for consumers to be able to defer payment. So you see this huge increase last year of about 44% year-over-year on payment deferring-- so buy now pay later, using tools like Afterpay and other kind of solutions that are embedded into these websites.
We're actually seeing an increase in that year-over-year. The interesting trend that we're seeing is not just the increase but the types of things people are willing to defer payment on-- groceries, apparel, sporting goods. It's just the categories have really increased. And some of that is driven by consumers being willing to buy more things online-- big ticket items, small ticket items-- and then being willing to defer the payment on those.
For the buy now pay later, we are seeing the overall basket of things that people are that consumers are willing to defer payment on is growing-- so their total basket, but also the smallest basket. So $225 smaller purchase items, we're seeing a 12% increase in the uptake of the buy now pay later capability.
ZACK GUZMAN: And the last question here for me, Pat, you know, this one I had to do a double take on because I almost doubted it could be real because it was taking me back to my childhood. But one of the top anticipated gifts, Tamagotchi Pix out there-- also, I suppose, less surprising people are buying bigger TVs. But I'm not sure if you're seeing one big trend there early on in terms of what people want for the holiday season.
PAT BROWN: Yeah, we're seeing a lot of-- so I think, you know, we're seeing a return to some of the goods that we're seeing-- that we've seen back in the day. So we're seeing Gabby's dollhouse is a very popular one. Tamagotchi, you're right, is back. I think the interesting thing that we'll be tracking as it relates to the supply chain is as consumers are purchasing those goods, they may be buying those earlier. And then how are they trading out within the category?
If they are not able to get those products, are they buying other things within the category? Are they buying other brands? And that's one thing that we're certainly tracking. And we've also noticed that consumers are spending more time buying on their desktop. And so they're actually buying these products through desktop as opposed to this trend that we've seen in the past, where a lot of it was smartphone purchasing. And so we think kind of the nature of the purchasing behavior is just going to continue to change. And those products will be very hot commodities in this holiday season.
ZACK GUZMAN: Yeah, a lot less reason to be shopping on the phone when you can stay at home. But Pat Brown, Adobe Vice President of Growth, Marketing, Insights-- appreciate you coming on here to chat, a lot of interesting takeaways there as we get closer to a crazy one. Appreciate the time.