Niche retailers have been successful with opting out of holiday discounting but can mass retailers afford to do the same?
Holiday season is upon us, and for retailers and consumers that means the frenzied season of heavy discounting, bold adverts slashing prices and consumers running from their dinner table and their loved ones to buy that latest must-have TV that is more than half price off.
Or at least that’s the way it’s always been. But this holiday season, it looks as if retailers (specifically, smaller, more niche ones) are changing tack, and forgoing the stress and hype for a calmer, more collected way. And it got us thinking whether this blueprint could work across the board.
Increasingly, a sub section of consumers are connecting with the Marie Kondo Effect (aka less is more/decluttering is key), and those who find excessive consumption problematic, are finding Black Friday promotions a turn-off. Niche retailers that serve this customer are increasingly opting out of Black Friday promotions, and finding that customer loyalty remains strong thanks to the retailer making a stand.
Deloitte research found that more than half (56%) of US consumers said they feel more loyal to retailers who close on Thanksgiving Day. The Mall of the Americas has revealed that it will not open on Thanksgiving this year, with plans to officially open for sales the day after Thanksgiving at 5am. And now, according to the NYTimes more retailers, have followed suit, these include HomeDepot, Nordstrom and TJ Maxx.
Smaller US retailers snatched headlines last year when they announced plans to opt out of Black Friday. Outdoorwear retailer REI said it would not open or discount on Thanksgiving or Black Friday, encouraging shoppers to “opt outside”. This led to an online sales increase of 10% on Thanksgiving and 26% on Black Friday over the prior year.
While, across the pound, smaller UK fashion retailer Jigsaw created a campaign called: “Reduced by Nothing; Standing for Something” – a promise to its customers that it wouldn’t discount its collections outside its dedicated sales periods at the end of each season. This led to it reporting a 12% jump in sales in the five weeks to January 2, 2016. This year, UK brand Fat Face plans to issue a price guarantee, where it will refund shoppers the difference if prices are lowered between the end of November and Christmas.
And US Retailers Patagonia and Everlane, are putting ethics before profits. Patagonia will be donating all of its Black Friday sales to environmental organisations in its 100% for the Planet Pledge. While Everlane will be donating its Black Friday profits to improve the lives of workers at its Vietnam factory, through its #BlackFridayFund. Both brands have created a serious buzz and gained fans with these ethical practices.
So can big, mass retailers follow suit and achieve the same success? Not entirely, a multifaceted approach is needed, in order to be successful according to sales figures. Opting out of Black Friday is not an option for mass market retailers. Last year, UK supermarket operator Asda did not participate, citing consumer fatigue, and reported a 5.5% like-for-like sales decline over the quarter ended January 1, attributing 0.4% of the drop to Black Friday.
And location is key. As the consumer focus shifts away from stores to online, retailers are having to move with them. Last year, Adobe estimated that on Thanksgiving and Black Friday, consumers spent approximately $4.45bn online. Over the same dates, sales in physical stores reached $12.1bn in sales, which shopper analytics firm ShopperTrak said is an estimated decrease versus 2014. Staples, for instance, will not open on Thanksgiving this year, but will begin offering its deals online on Thanksgiving evening.
So the answer isn’t a simple one, two clearly different approaches works for smaller retailers with dedicated consumers who like to feel part of the brand community. On the other hand, there are the mass retailers, who are best known for their heavy discounts and huge crowds, and who this year will need to ensure that their e-commerce infrastructure is tougher than ever.
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