In a year marked by economic uncertainty, the likely assumption is that we will see more muted levels of Black Friday spend in 2023. This was widely presumed last year; however, consumers took advantage of early discounts in the run-up to Christmas, buoying end-of-year sales for ecommerce retailers and marketplaces. According to Criteo, looking at data from 5,400 retailers in 60 countries, online transactions were up +4.8% year over year on Black Friday 2022 compared to 2021.
This year looks to be a similar picture, with spend even predicted to further rise in the UK. Hugh Fletcher, Global Marketing Director and Thought Leadership Lead at Wunderman Thompson Commerce and Technology, said that according to Wunderman Thompson data, “UK spending is set to increase by 7.5% this Black Friday, while in the US it is set to remain at 2022 levels.”
So, how can retailers take advantage of this fact, and how might consumer behaviour impact overall strategy this Black Friday?
“There is one event that consumers simply won’t scrimp on, and that’s Christmas”
Hugh Fletcher told Econsultancy that, despite an ever-present cynicism around the deals on Black Friday, this rhetoric misses the point of the event.
“It’s not about the best deals of the year, but the right deals at the right time,” he said. “We know that the number one reason for buying on Black Friday is to buy Christmas presents for loved ones, and there’s no better time to do that than with your last pay packet before Christmas.”
Commenting on the predicted rise in spend for the UK this year, Fletcher said that, “this is a surprising prediction given the cost of living crisis, but it would seem that there is one event that consumers simply won’t scrimp on, and that’s Christmas. As a result, many shoppers will be using Black Friday as their way of Christmas shopping at the best price.”
“As for Black Friday itself, while it may have lost some of its excitement and magic, its role is nonetheless important, if not a little bit more perfunctory and transactional,” he added.
“Our advice … would be to avoid discounting completely”
Tony Preedy, managing director of ecommerce marketplace Fruugo, also predicted that many consumers will take the opportunity to buy for Christmas. However, this tends to delay consumer spend until the end of November, a fact that “riskily concentrates retailers’ trading into a narrow time frame,” said Preedy.
“Some [retailers] are combatting this by offering pre-Black Friday discounts and offering promotions at other times to expand this window and prompt sales.”
“We are also seeing more and more businesses participating in alternative sales events or opting out completely,” he noted. This is largely due to the risk involved, particularly for smaller retailers who could find themselves financially on the back foot if consumers don’t spend as planned.
“The problem is that very few retailers properly calculate the impact on gross margin of reduced prices and the massive growth in units required to keep income stable, never mind growing. In this economic climate, indiscriminate use of discounting to drive volume can be ruinous.”
As a result, Preedy said, “our advice to brands and retailers would be to avoid discounting completely and focus instead on increasing the visibility of their products with a robust international sales strategy.”
We are also seeing more and more businesses participating in alternative sales events or opting out [of Black Friday] completely.
– Tony Preedy, Fruugo
The price needs to be right for retailers to compete with Amazon
When it comes to Black Friday success stories, Wunderman’s Hugh Fletcher said that this year won’t be much different to any other.
“As always, Amazon will be hyper-dominant; we’re expecting over half (54%) of all Black Friday sales to go through Amazon,” he predicted. “Why? It’s a one-stop-shop for consumers offering everything they need, in one place, and supported by lightning-fast delivery and class-leading customer support.”
“In fact, three in five, or 59% of, shoppers simply default to Amazon without even thinking to search for deals, versus 32% [who find deals] via search engine and just 19% through retailers.”
What would it take, then, for retailers to challenge Amazon this year? Fletcher suggested that the cost-of-living crisis, combined with the effects of working from home, could make consumers hungrier for the best deals. “So, no matter what anyone says about experience and brand, the key driver of choosing another retailer or brand over Amazon will be price,” he said.
Fruugo’s Tony Preedy reiterated this point, suggesting that savvy consumers will look for the best possible deals – and earlier than ever.
“Black Friday discounts are of course useful for some shoppers; however, consumers are becoming more and more discerning when it comes to researching products via online search and comparing price, availability and delivery times.
“The last few Christmases have been marked by supply chain issues and economic difficulties, so shopping earlier is becoming the norm for many to avoid disappointment.”
Transparency from retailers will trump scarcity and countdown tactics
With consumers becoming increasingly aware of retail tactics, Preedy also hinted that retailers should, for once, forget about the long-term lifecycle of Black Friday customers.
“Today’s shoppers are shrewd and no longer loyal when it comes to deciding who they are buying from. If they can’t find what they want from one retailer, online searches will quickly present an alternative supplier that has the product in stock.”
This, said Preedy, means that retailers need to be even more savvy about online strategy, and crucially, ensuring that ecommerce and stores are synchronised properly. “With Black Friday and the festive shopping period in general being so competitive, converting inventory into cash becomes even more crucial,” he said.
As a result of this lack of loyalty, Fletcher predicted that retailers will take a new approach this year – one that emphasises honesty over other more tried and tested tactics like scarcity.
“We expect to see more transparency in discounting. Tracking websites, and even search engines, are now helping consumers to understand the deals they are getting (or not getting),” continued Fletcher. “And consumers are wise to Black Friday tricks, so increasingly we’ll see retailers and brands being honest and open about the savings that consumers are making.
“When it comes to scarcity, we advise proceeding with caution. While limited numbers can encourage a greater FOMO, most consumers actually just become frustrated when products are not available. Inciting this feeling in consumers may deliver some short-term benefit, but will not create a loyal or returning customer.”
“Getting a social media strategy sorted for Black Friday is now vital”
When it comes to reaching consumers, Fletcher predicts that social media will play a bigger role than ever as a promotional channel for this year’s Black Friday.
“This is the year that deals through social platforms hit the mainstream,” he stated. “There is mounting evidence that social media is increasingly the search engine for younger consumers. And the data tells us that the younger age groups are less likely than their older counterparts to default to Amazon. Getting a social media strategy sorted for Black Friday is now vital.”
In addition to this, Fletcher said that factors such as ethics, morals, and purpose will continue to grow in importance, too.
“Consumers often struggle to reconcile their desire to purchase with their fears for the environment. That is why we’re seeing increases in the percentages of consumers offsetting their guilt by choosing environmentally friendly delivery options, like Amazon Day Delivery,” he said. “This year, 59% of consumers say they will be choosing these delivery options at checkout. Retailers and brands need to make sure it’s easy for consumers to offset their guilt!”
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