By Emily Black, Content Executive and Analyst at IMRG
Black Friday has been a source of trepidation and anxiety for online retailers this year, as it’s been an extremely turbulent time for ecommerce. Amidst shipping problems, stock shortages, and the reopening of the high street, online retailers have all felt a sense of dread when thinking about their November strategies. To combat the impact of such issues, Christophe Pecoraro, Managing Director at PFS Europe, said that, ‘Retailers and brands must place their focus on the key factors driving customer purchasing decisions – cost, convenience, customer service and choice. Flexibility has never been so important, and retailers should offer consumers the ability to shop in the way they prefer to feel most comfortable. With the right omnichannel structure, such as curbside pick-up, buy online, pick-up in-store (BOPIS), or even buy online and ship-from-store (BOSS).’
At IMRG, we’ve been tracking exactly what was expected for Black Friday month, and the big day itself, along with the outcome for retailers. We’ve gathered together initial data surrounding key data points, such as growth and revenue, in the ecommerce market. We spoke to a variety of retailers in the industry, in order to find out exactly what they’d observed. Combined, we’re bringing you our Black Friday review from 2021.
First, let’s take a look at performance. Every retailer has been sat on the edge of their seat, waiting for the big results. Due to last year’s growth being so high (due to lockdowns forcing customers online) it was always expected that YoY growth was going to be negative this year, as 2021 could not live up to the revenue of its predecessor. However, whilst the market was predicted to be down -10%, revenue was actually further down than expected, at -14.3% overall. Despite 20 of the largest retailers in our panel all earning £1.2million and above, each, on the big day, only 2 of them reported positive year on year growth. This figure shows exactly how tough the climate was out there on Black Friday this year. To counteract the chaos of November, Brad Houldsworth, Head of Product at Remarkable Commerce, suggested that, ‘Having a trading strategy that is heavily reliant on running promotions is not healthy and profitability will be lower than needs be. Committing to a strong campaign strategy which involves little discounting can pay off long-term.’
The category of Electricals took the biggest hit, with a -35.7% YoY revenue fall, as every large electronics retailer within our panel reported a double digit decline. Other retailers suggested that customers were buying electricals that were heavily discounted, whether it was during Black Friday week, or earlier in the month. Home and Garden also performed poorly, as from our 35 retailers within the category, 21 of them reported a double digit negative growth. Revenue can also be lost after Black Friday, through the returns process, or chargebacks. In order to prevent such chargeback issues, Monica Eaton-Cardone, COO and Co-Founder of Chargebacks 911 suggests, ‘My advice is to leverage your current chargeback data for business insights and problem areas. For example, if the majority of your chargebacks were the result of shipment errors, put monitoring in place to help stop repeat scenarios. It’s a good idea to separate each area of your business that can lead to chargebacks and establish a baseline to measure against. The value of real-time, enriched chargeback data couldn’t be higher, than just prior to spending spikes.’
There were 93 retailers in our panel for Black Friday data, and 61 of them reported negative YOY revenue growth. This means that any retailer who reported a greater than 10% YoY growth can consider themselves in the top fifth of performance.
Alongside the revenue itself, traffic took a huge hit. As many customers were back to working in the office, they could no longer browse Black Friday deals throughout the day, meaning there was huge competition for those customers in the evening, and over the weekend. On a positive note, sites were far better able to cope with the spike in Black Friday traffic. Hugh Fletcher, global head of consultancy and innovation, at Wunderman Thompson Commerce observed that, ‘One of the previous recurring trends of Black Friday has been sites crashing due to excess traffic. However, this was not the case in 2021. With more consumers forced online in 2020 due to lockdowns, businesses have learned and planned this time around and, as a result, vastly improved their digital infrastructure, meaning that most were comfortably able to cope with the spike in traffic.’
The cost per click and per website visitor increased nearly tenfold, as it was extremely expensive to acquire customers during this important time. Rebekah Waller, Performance Marketing Manager at BOSCO™ commented, “After last year’s peak in terms of the pandemic, in-store shopping came back a little bit in 2021 as customers were eager to get back in store. However, online competition was still intense. In terms of Paid Media, CPCs started to rise earlier than usual. It’s clear that this year was no exception to the trend of Black Friday and Cyber Monday sales starting sooner in the month. So, it felt necessary to start creating excitement around any offers as early as possible.”
Website traffic was down -15.8% on average, suggesting that there was a real scramble to get people to visit individual websites. This can be considered an indicator of shoppers being drawn back to in-store shopping, after 2020, when they had no choice but to shop online. Interestingly, conversion rates seemed to stay the same, however, businesses are less likely to get customers to check out, if less of them are visiting the website in the first place. Sean Sherwin-Smith, from HelloDone, said that, ‘The problem is, in my opinion, that retail departments sit in customer experience silos – customer acquisition, inventory availability, customer support, fulfilment, returns etc. Getting the customer to click buy is no small challenge but the customer journey is at its most fragile once the buy button has been clicked. The customer has placed their trust in the retailer and it’s the place where the loyalty battle is won or lost.’
Interestingly, we saw that revenue for online-only retailers is up +15% YoY, whereas omnichannel is down -25%. This could be because those with both online and in-person marketplaces saw more people returning to their stores, therefore decreasing those shopping online. It’s thought that returning to in-store shopping is seen as more of an event and an experience now, therefore people may be less inclined to shop around online, whilst in a store (as was common before the pandemic), so customers were just buying items when they found them in a store. This also eliminates the fear of delayed deliveries, as people can simply return home, with their item in hand.
What can we conclude about Black Friday 2021, based on the data and results we’ve seen here at IMRG? The main takeaway, is that overall revenue, sales, and growth, were down. This was expected, as the market could not be expected to perform as it did during the UK lockdowns. Omnichannel retailers have seen more success in their stores, suggesting that customers are enjoying returning to the high street. The main question concerns what will happen regarding the pandemic. Depending on how the Omicron coronavirus variant plays out, we may see drastic changes implemented across the UK. How might this impact Black Friday, 2022?