By Emily Black, Content Executive and Analyst at IMRG
Last week, we looked at how online retail performed over November, and the week of Black Friday. We found that overall revenue, growth, and sales were down, as well as online traffic. Ben Foulkes, Senior Business Development Director at Epsilon observed that, “Ultimately what most of our clients have experienced is a bit of a Covid re-calibration this year in terms of traffic to their ecommerce sites, with more shopping taking place offline. What’s going to be crucial next year is brands to look at new innovative ways to drive incremental traffic. Also they will have to keep working hard to connect their offline data to online activity to create a genuine one to one dialogue with their customers and enhance relationships with them in this way.”
We believe that this decrease in sales, growth, and traffic, is due to the reopening of in-person retailers, drawing more people to shop on the high street than were last year, when we were in the midst of the UK lockdowns, so no one had a choice. Whilst conversion rates stayed the same, the negative traffic (-15.8%) meant that there was less money spent, less revenue, and negative overall growth (-14.3%). Sandeep Madala, from MoEngage, commented that, ‘Our survey report, “Consumer Insights for the Holidays”, stated that 28% wanted to continue shopping online while only 12% would buy more in-store. This held true during Black Friday this year. Stores didn’t see queues fighting to get their hands on discounted merchandise in 2021. Customers’ unwillingness to shop in-store could be attributed to the weariness brought on by the new variant of the pandemic. The customers who ventured into malls may have done so due to the anticipation of inventory shortages and delivery delays online.’ And whilst there is still a wariness of shopping in-store, it seems that the very fact they were open drew shoppers (and therefore traffic) away from online shopping.
However, it’s equally important to look at the strategies, campaigns, and discounts that retailers were running this year. Here at IMRG, we tracked 91 household-name retailers’ Black Friday discount campaigns. This included data on when they went live, and the amount of discount they’re offering.
The graph below depicts when in November Black Friday campaigns went live, showing a clear difference between 2021 and 2020. In 2021, we saw campaigns go live earlier in November, but trail off closer to Black Friday itself. This could be because retailers have run out of stock, or wanted their deals gone before Black Friday, so they could get ahead of shipping problems.
One strategy to combat these supply chain issues, was suggested by Vladi Shlesman, ChannelAdvisor, EMEA MD: ‘We’ll likely see supply chain issues continue well into next year and some are speculating that challenges could continue beyond the next 12 months. This gives a lot of time to prepare for potential Black Friday 2022 issues and avoid out-of-stock labels that will only cede customers to competitors. Brands will need to watch stock supply more closely than ever in the lead up to Black Friday 2022, ensuring inventory is available to early festive shoppers, for the intense activity during Cyber Five and for last-minute buyers. Those brands that will thrive will be reviewing this year’s sales to identify top sellers and evaluate new styles or product lines that may be popular during the peak season.’
The number of campaigns live on the day of Black Friday was very similar this year to last year, with around 250 of the 300 retailers we were tracking, live. Brad Houldsworth, Head of Product at Remarkable Commerce, believes that, ‘From a technology point of view, it is absolutely essential for your infrastructure, architecture and post-purchase systems to be ready for sales surges at any point.’
The surge in campaigns going earlier into the month, could be accelerated by supply chain issues, as these changes in strategy might be to help mitigate the impact of one day of chaos, as opposed to a month of steady sales. Andrew Norman, Managing Director of ShipStation International, said that, ‘Black Friday has become a race to get the best deals out, the earliest in November. The effects of which have had a more significant impact on consumer spending than most could have anticipated this past Black Friday. Preparation is king for this season, so stocking up on inventory a few months ahead of November is pivotal. Based on last year, we‘ve also made a strong push for automating as much of the delivery process as possible, such as order assignments to really great feedback from our customers’
We then looked at how many retailers didn’t put any form of discounting online during November. The results were telling, as we’ve been tracking this data for a number of years now. It can be seen that since 2017, the number of those not participating has dropped hugely, and consistently seems to get lower towards the actual day of Black Friday itself. This data suggests a pressure placed upon retailers, by other retailers, to engage in Black Friday discounting, so that they don’t fall behind.
As for the rates of discounting themselves, IMRG tracked each of the retailers’ website across the month of November, and found out what discounts they were offering. This included whether they were offering more, or less in terms of the percentage of discount (e.g. 20% may jump to 25%, meaning it’s up) and the nature of the discount itself (e.g. a sitewide sale might now only apply to a single category, meaning it’s down). We observed that roughly 40% were up, 40% down, and 20% stayed the same, which tells us that many retailers were changing their strategies; few were keen to keep their discounts the same as the year before.
Rory O’Connor, Founder and CEO of Scurri said that, ‘While Black Friday is typically a time for price cuts and bargain hunting, an additional measure taken by retailers this year was the increase in prices in an effort to overhaul hikes in costs due to such supply chain issues. Scurri found that over 95% of online retailers had or had plans to increase their prices – 73% having already increased their prices at the time of surveying and 22% not yet having increased their prices but with plans to do so shortly prior to Black Friday.’
Another key strategy change was suggested by Joe Farrell, Vice President of International Operations at PFS, sharing his ideas for 2022, claiming that, ‘Personalisation options, sustainable packaging, and numerous delivery partners can ensure you get closer to the customer at each and every stage of the transaction. Real-time inventory management will be essential to avoid channel conflict and mitigate potential customer disappointment, as restrictions evolve, and shops reopen across the world.’
The graph below depicts the duration of retailers’ Black Friday campaigns, mapped against the total share that Black Friday (the day itself) had, of the revenue. As we would expect to see, it’s clear that the longer campaigns saw a lower percentage of revenue from the Black Friday day, whilst shorter campaigns saw a bigger proportion of revenue from the day. Our data shows that increasing the campaign length doesn’t always result in greater returns, and that the average campaign length (in both 2020 and 2021) was 11 days long.
So with Black Friday 2021 been and gone, all that’s left now, is to look to the future. What should retailers be thinking about when it comes to Black Friday 2022? Key questions that may be at the forefront of everybody’s mind include the future of the pandemic, and the threat of new variants, and how ecommerce will grow over the coming year. Alex Naughton, Head of Klarna UK & Ireland said, “Every year Black Friday proves to be a key date in shoppers’ calendars, especially those keen to snap up the best deals and spread the cost of Christmas. Consumers today are more savvy planners rather than spontaneous splurgers, with 56% of UK online shoppers having a clear idea of what they’ll be buying before Black Friday. And with consumers having taken a more strategic approach to their festive shopping this year, retailers should consider how they can help shoppers plan well in advance of Black Friday 2022.’
This may offer some insight into how we should be thinking ahead, with customers in mind. As the pandemic has taught us, anything could happen within a year. Will retailers need to be quick-thinking, and ready to adapt their strategy, as we look ahead to Black Friday 2022?