This week, a look at the Western-style standoff between customers and brands for the best BFCM discounts, and the ways customers are getting savvier. Scroll down to use Glossy+ Comments, giving the Glossy+ community the opportunity to join discussions around industry topics.
Customers are getting merciless on Black Friday as the purchase standoff between brands and retailers intensifies. This year, many customers held out for Cyber Monday for the best deals.
Customers are increasingly deal-hunting through comparison sites, downloading apps for discounts and leveraging AI assistance when shopping. On the other hand, they’re also dealing with discount fatigue, or becoming numb to over- or extended discounting. As such, brands are being forced to update their strategies to attract shoppers.
According to Adobe Analytics, which tracks prices online, Cyber Week, starting on Thanksgiving and going through Cyber Monday, brought in $38 billion, an increase of 7.8% year-over-year. That was bolstered by record spending online on Thanksgiving Day, up 5.5% to $5.6 billion; on Black Friday, up 7.5% to $9.8 billion; and over the weekend, up 7.7% to $10.3 billion.
“The BFCM results are indicative of the fact that customers have a lot of choice right now, both domestically and internationally, in terms of apparel,” said Vivek Pandya, lead analyst at Adobe Digital Insights. “They’re very much in the driver’s seat. They can compare shops very easily, with multiple browsers open. Having that much choice produces more competition, creating downward pressure on prices.”
Shopify paints a similar picture on sales. From the start of Black Friday through the end of Cyber Monday, Shopify reported that its merchants’ sales totaled $9.3 billion, marking a 24% increase over last year.
“Selective, limited-time discounts worked well, mainly because they created a sense of urgency with the customer and stimulated buying,” said Neil Saunders, retail analyst at data analytics company GlobalData. “Old Navy had some great headline deals on popular items like PJs, which were valid only for a limited time. Some retailers offered money off and free gifts for spending over a certain amount, presumably in a bid to drive volumes and transaction values.”
On a related note, gift cards are increasingly being offered by retailers, in an aim to clinch repeat purchases, according to analysts. For its part, luxury retailer Saks Fifth Avenue offered up to 50% off on clothing by brands including Bottega Veneta, The Row and Coach. In addition, for every $200 spent, customers could get $50 off with a code. Saks also ran a Black Friday weekend special, providing a $75 gift card with a purchase of $150 or more. Saks was not available to comment on its BFCM performance.
“This year, through strategic in-store and online initiatives, we presented enticing discounts, our best seasonal product yet with savings of up to 40%, and exclusive doorbuster deals,” said Michelle Peterson, chief marketing officer at jewelry brand Kendra Scott. She noted that the brand saw record sales on its best-selling Mikki Hoop earrings and multiple product sell-outs by 9 a.m. on Cyber Monday, when “doorbuster deals” were offered — the popular Framed Elisa Pendant Necklace, for example, was priced at $25. “The outcome exceeded our expectations, resulting in double-digit traffic growth and surpassing last year’s performance.”
She added, “We found that our customers began their holiday shopping well in advance [of the holiday shopping weekend], engaging throughout the entire 10-day period preceding Cyber Monday.” Kendra Scott’s revenue was north of $400 million in its most recent fiscal year, ending January 2023.
According to data from Amazon, which is typically among BFCM winners, global customers purchased over 1 billion items on the marketplace over the weekend this year, with shoppers saving nearly 70% more than last year during Amazon’s annual 11 days of deals. However, some customers found that merchants on the platforms inflated their prices ahead of the shopping event to promote steeper discounts, which is driving down trust. This is resulting in shrewder purchasing decisions, especially by younger shoppers hunting for deals.
On TikTok, the hashtag #blackfridaydealsnotworthit had 71.1 million views, with many videos showing shoppers feeling disillusioned that the annual shopping event is not what it used to be. Videos of customers peeling back $5 tags revealing previous prices that are the same or lower are circulating the platform, with 2.5 million views on average.
“While retailers have been running many different promotions, they have not all been perceived as real deals by customers,” said Kristi LeBlanc, managing partner of Global Consumer & Retail at DHR Global, a global leadership and executive search advisory firm. DHR Global’s clients range from privately held mid-market companies to multi-billion-dollar publicly traded organizations. “So retailers are working harder to get the consumer to transact,” said LeBlanc.
Some of the new, strategic deals are learned behavior from fast-fashion apps like Temu and Shein, which regularly combine discounts and offer rewards to drive purchases. And with more transparency around available deals, via sites like BlackFriday.com and social media, customers are now gaming the BFCM system.
“Consumers are getting very sophisticated around price tracking,” said Pandya. “They’re spending a lot of time on TikTok and Instagram, so they’re getting pointers from influencers and seeing a lot of advertising thrown at them [proming] ‘best pricing.'” Customers are also comparing discounts on websites and apps to find the best deals.
This will only get more sophisticated as customers go beyond existing tools. “We will see more consumers leveraging generative AI through their purchase journeys and asking it for alternatives to more premium luxury brands — customers could look for cheaper dupes or alternatives,” said Pandya. “It could also be used to perform a more sophisticated search. [For example] you could give gen AI a budget and ask it to suggest products.” Big search companies are investing in making this possible. In early November, Google expanded its Search Generative Experience, which makes online cross-referencing for shopping easier using AI.
Paige Decker, vp of growth at T-shirt brand True Classic, said that the brand focused on big, simple sales to deliver results and build trust instead of overloading customers with offers. “We offered up to 60% off starting November 2 and shifted to a deeper discounting the week before Black Friday, at up to 70% off,” said Decker. The brand focuses on simple basics, which is typically a popular category for shoppers during Black Friday. “We had many of our best tee packs offered at 40-50% off, which was a driver of success,” said Decker. The company is on pace to bring in $250 million in 2023 revenue.
Decker added, “I saw a lot of brands on social with complicated messaging like, ‘x% off this, but y% off that.’ Simple strategies always win, with a straightforward, ‘Up to x% off.'” Shoppers are directed to the True Classic site after clicking an ad on social media, which is driving the most sales for the brand for the holiday season. This reflects the higher mobile shopping usage this year, with 59% of online transactions happening on mobile, according to Adobe Analytics.
For True Classic, BFCM was also valuable for new customer acquisition. According to analysts, many customers look to low entry-level pricing and discounts during the shopping season to try out a brand. “It’s critical to stay ahead of that curve, including with site enhancements to create a seamless and frictionless online shopping experience,” said Decker. “This is especially important for consumers are newer to e-commerce. If they can’t figure out how to buy because of a complicated site experience or offer, they’ll drop off.”