The other week, Qubit were privileged to take part in IMRG’s Black Friday lunch at Simpson’s in the Strand. This event brought together industry experts and leaders in retail to discuss IMRG’s findings - and brands’ experiences - of Black Friday 2018.
Black Friday isn’t going anywhere. It’s entered our cultural consciousness. But one of the things that struck me most about the most recent peak season is the need to bring in a more strategic, long-term approach. That’s because there are three main trends we’re seeing, all of which have serious implications for brands.
Let me explain.
Black Friday (and Saturday, Sunday, Monday, Tuesday…)
IMRG’s data highlighted that, although still impressive, spending on Black Friday itself was only half the forecast figures: an uplift of 7.3% (or £1.49bn) compared with an expected 13.2% uplift.
This didn’t necessarily reflect the experience of every brand, but this reduced spike is no surprise when we consider how the retail peak has spread out across weeks, rather than days.
Our own data shows that the five-day period ahead of Thanksgiving now sees up to 19.48% more shopping sessions, that is more visitors, compared with the control (i.e. non-peak days), versus an uplift of just 3.48% in 2016 and 14.78% in 2017. Our survey backs this up, with around two-fifths of respondents agreeing they have started their shopping earlier this year compared with last year, and that they are purchasing more on mobile.
Society has trained consumers to shop sale; they are savvy to the volume of discounts available and savvy to the fact that more and more discounts are available at various points in the run-up to and beyond Black Friday. Our data shows that the pressure to purchase on that one day has been removed, so customers are shopping over a longer period of time.
Is Black Friday worth it?!
Anecdotal evidence and conversations with different retailers imply a thread of obligation when it comes to Black Friday. Brands participate because their competitors do so and because their customers expect it. As the duration of the wider Black Friday Peak increases, so does the burden it places on retailers in terms of effort and resource.
But the value it delivers is still somewhat in question.
Traffic and revenue figures are often discussed, but what about margin, profitability or sustainability? Do brands really know what these sales are worth to them in the long run?
Black Friday is still comparatively new, and consensus shifts in terms of whether to participate (even those who don’t participate tend to see traffic spikes, as consumers are put in the mood to shop), when it should start, how big a discount to offer. Currently, these tend to be tactical decisions, based on competitor actions, needs of the moment, visitor and sales figures.
Turning newbies into brand loyalists
It’s no news to us that acquiring customers is expensive; it costs 5 times more than keeping an existing one, and advertising around Black Friday is also 2.6% more expensive than the rest of the year. Add to this the fact that only 27% of them will be back to the site to purchase again, and it suddenly becomes clear that brands must act to maximize the year-round potential of Black Friday.
This means it is essential for brands to capitalize on the influx of new sale shoppers who arrive on site, and turn them into repeat purchasers.
To do this, it is key to understand visitor activity throughout peak, from the channels involved (mobile is on the rise, with the share of revenue increasing by 30.9% from 2016 to 2018), to visitor preferences and on-site activity. Decisions can then be based on visitors, rather than competitors.
Time to think strategically
Retailers are pressured to participate in Black Friday, but don’t seem to have certainty regarding the value (if any) it delivers for them over the longer term. What’s more, they are stuck engaging in reactionary, tactical activity.
But setting discounts shouldn’t be a reactive decision, especially in the current challenging nature of the retail industry. My personal take is that brands need to take a longer-term view in planning for peak, and remain strong in this strategic decision.
As you’ve seen above, there are three issues in play for brands over the peak, but there are strategic actions brands can take to handle them.
The lengthened peak period means brands can come into their own
Going from a single day of sales to a peak period is smoothing out some of the traffic spikes, and ecommerce technology is stabilizing, so brands don’t need to sacrifice creative to manage the strain of high traffic volumes as much as they might have in the past.
Further, if brands really understand their customers; understand what they want and what different cohorts of them want, they can tailor their peak strategy over that period to suit.
This means brand identity can come into its own across the peak; brands can be more confident in their approach. Retailers can become more discerning in when they decide to participate, and what they discount and to who - sticking to certain lines according to their business strategies, to ensure a more sustainable and brand-true response to the peak period.
With data, brands can be bold enough to pace themselves
Profitability is certainty still elusive. Either brands lack margin data, or are having difficulties getting it into an actionable place. It’s essential for brands to understand the impact peak discounts and initiatives have on the business, to enable them to build a longer term, sustainable approach.
To do this, brands should look at getting these data sources integrated with their web and personalization technology. This will allow them to make business decisions (like what, and when to discount) based on evidence, rather than gut instinct or FOMO versus their competitors.
There is a huge opportunity to grow loyalty
Traffic is still strong — if underperforming compared with predictions — and much of this traffic is new. Brands should build in strategies to understand their peak visitors and encourage them back to the site for subsequent purchases after the sales are over, in addition to not forgetting and in fact leveraging their existing customer base - in my view, the size of this opportunity is currently undervalued.
A final thought.
All of these solutions call for personalization, which will enable brands to; vary the offers they present on site based on data, integrate the data sources they need for better decisions, and target both existing customers and peak customers afterwards, encouraging them on the path towards that all-important repeat purchase, and hence increased loyalty.