The peak buying season is now here.
There is a level of mixed excitement going into Thanksgiving week; retailers are wondering if inventory levels are appropriate, if top sellers were accurately anticipated, and if weather will cooperate during key shopping days.
By now, reacting to these factors is beyond a retailer’s control since it’s too late to make any changes, regardless of the outcome. However, when it comes to affecting sales, there is a weapon in the arsenal that can be pulled at any time during the Holiday period—the promotion.
By lowering price and offering deals, retailers can bring in the sales. Discounting too little may not move the needle. Discounting too much will yield topline sales at the expense of contribution. Whether a retailer is online or brick and mortar makes no difference. Finding the right balance of providing customers with the most appealing deal while still maintaining some level of profitability is an art and a science. The decisions a retailer makes about promotions could impact the entire year’s p&l.
The promotional landscape for ecommerce going into Holiday 2012 will be more complicated than last year, mostly related to timing and frequency of promotions. comScore, MasterCard SpendingPulse, and PM Digital’s own Rewind Index all show that in 2011, there was a large growth in traffic and sales for the days leading up to Cyber Monday with Black Friday and even Thanksgiving posting huge YOY gains.
Posting large sales gains earlier in the shopping season helps retailers, particularly if these sales are incremental but also to provide a cushion against unforeseen events like big storms that could negatively impact sales further into the peak season.
From a promotional standpoint, though, retailers are wondering how big the deals need to be to leverage the higher traffic on Black Friday and how those deals need to differ from Cyber Monday, which has consistently been the highest day for retail traffic based on many indexes, including comScore data. The consumer is watching closely. Some would rather do their shopping online rather than get up in the middle of the night and/or deal with huge crowds in order to get the big Black Friday deals.
By now, retailers have a plan in place for Black Friday and what some are now referring to as Cyber Weekend. Black Friday ecommerce deals are a big part of this year’s promotional calendar. The deal-conscious consumer has info at their disposal that retailers are making available. Target, Kohls, Express, Macy’s, Amazon, J.C. Penney, Overstock and Sears are all promoting Black Friday in paid search with previews and times for when Black Friday sales will be announced or take effect.
The Black Friday websites already have many in-store flyers scanned and available online. What consumers don’t yet know is what the online Black Friday deals will be and how they will differ from deals in store and those that will be offered on Cyber Monday.
The way most online retailers have mapped it out is that there will be a series of deals offered on Black Friday, Cyber Monday and deals-of-the-day promoted throughout the weekend and the entire peak buying season. Deals-of-the-day have been very effective at driving traffic and sales. Retailers also understand the leverage they have in building up their email files by offering unique deals in exchange for a name.
Likewise, for brands trying to build Facebook fans, Black Friday offers a great opportunity to do that since the consumer now knows that first time likes and/or fans of a brand on Facebook are usually offered discounts unique to them.
No doubt, ecommerce marketers are reacting to last year’s sales numbers for Thanksgiving week and placing more importance and focus on Black Friday this year than years past, but most still believe that the largest online deals of the year will still be offered on Cyber Monday. Black Friday deals will help retailers be in front of the traffic with a good promotional strategy, but they recognise that the top traffic and/or sale day will still be Cyber Monday.
Cyber Monday has become a retail event helped in a large part by media attention, and the traffic numbers will not disappoint. In fact, every year at least one major retailer’s site crashes due to the influx of traffic putting pressure on the server.
Beyond Black Friday and Cyber Monday, most retailers have a promotional calendar that has already been established; however, there will be more flexibility for veering off this schedule as the buying season progresses. Watching the competition, sales, and inventory will dictate what a retailer chooses to do on a daily basis, promotional-wise.
If all goes well, they will give away less than they will need to than if sales are soft. With the Holiday traffic moving earlier into Thanksgiving week, what remains to be seen is whether or not the traffic is incremental or if it is just shifting back on the calendar.
Another factor is how aggressive the retailer’s sale plan is. The traffic and sales may be there, but if the plan is very aggressive, they may still have to pull the lever on deep discounts to meet internal forecasts.
Ecommerce sales in 2012 Holiday are projected to be 15% higher YOY. Online retailers have spent all year testing offers and copy to position themselves well for the peak buying season for the days they need to be promotional either because of a high influx of traffic or because they need to move the needle on sales further into the buying season.
While the timing and frequency of promotions this year is more complicated than years past due to the emergence of Thanksgiving and Black Friday as high online sales days, next year will bring the emergence of same-day shipping, which is a circumstance retailer’s will need to get their hands around in 2013.
For now, retailers are on the cusp of seeing how everything they have prepared for all year with Holiday in mind will pan out in terms of merchandise, offers, promotions and technology enhancements. Hopefully there will be strong outcomes for all.
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