This could be a dangerous tactic, of course, with over-the-top advertising potentially putting off consumers (more so than previous years).
Black Friday spend is predicted to be subdued this year, as the cost of living crisis hits both consumers and retail brands. New figures from Retail Economics and Metapack suggest that consumer spending on non-essential items during the last three months of the year will drop by £4.4bn, with nearly 60% of UK consumers expected to cut back.
But of course, a main driver appears to be excess stock – a problem that the Washington Post says has even hit giants like Amazon – and it is expected that we could see retailers who don’t typically partake in Black Friday do so this year in a bid to shift unsold inventory.
Retailers start Black Friday discounting early amid excess inventory
Celigo’s Gert-Jan Wijman also stated that a targeted marketing approach will be a crucial investment for retailers in the current economy. “Businesses need to look at investing in the tools that best allow them to analyse their campaign success,” he said. “The ability to assess which promotions, price points and marketing strategies are working, and then aggregating that information to inform future decisions, is an invaluable tool.”
“Peak sales periods have noticeably crept earlier and lasted longer over the past few years, so it’s not a surprise to see the same trend continuing in 2022,” Chris Slade, consultant at Wunderman Thompson Commerce, told Econsultancy. “Christmas is always disproportionately important for brands and with a cost of living crisis crystallising, multiple retailers will be worried about not hitting their targets.”
“Thanks to soaring energy bills and inflation, consumers are going to have less disposable income this year. As a result, they will likely flock to the offers that will save them as much money as possible,” he said. At the same time, Wijman also suggested that factors other than value for money would begin to play a bigger role. “Or [consumers] will shop with the brands they trust the most and that offer the most consistent customer experience.”
Consequently, Slade said that retail brands who already generate success from Black Friday – as well as those that have built a strong customer experience – are most likely to win. “A brand like Amazon, which is already perceived as being value for money and having a winning proposition thanks to Prime delivery, can expect to see a strong upturn as usual,” he stated.
Better value and quality service will be big selling points
Interestingly, it’s not just small or high street retailers who are heavily discounting in this way. This year, the likes of Target and Amazon have set the trend for an extended Black Friday, with Target launching deals seven weeks before Black Friday itself, and Amazon also launching its early access sale for Prime members in October. These early sales can help consumers to spread the cost of holiday shopping by buying ahead of the main November event. They also give retailers greater control over inventory (amid any supply chain issues), allowing them respond to customer demand and deliver more targeted discounts on Black Friday itself.
“Delivering a high return on ad spend will still be expected, so teams must find strategies that enable this,” he said. “One tactic is shifting away from awareness campaigns and towards performance marketing.”
“Better value and quality service will be big selling points this year. The majority of customers cited faster delivery as the top improvement they’d like to see in online shopping, with a whopping 70% wishing other marketplaces would offer a similar service to Amazon Prime. Retailers that can promise and deliver this sort of enhanced service, Amazon or otherwise, will have a leg up on the competition,” said Slade.
“Brands and marketeers are going to need to advertise their products as having truly “unmissable value” this year,” he stated. “There’s no doubt that price competition will be fierce as everyone battles for a share of wallets, but it will be most interesting to see brands adopt different approaches. Can they generate a fear of missing out and trigger that purchase? This year more than ever, I’m expecting no shortage of ‘last chance’ and ‘limited stock’ type deals.”
Marketing strategies are likely to be affected this Black Friday, too, as companies are faced with cuts to advertising and broader marketing. Ben Cicchetti, VP of Corporate Marketing for InfoSum told Econsultancy that “marketers need to do more with less.”
Ecommerce Quarterly: Q3 2022
Long-term customer relationships come to the fore
Wijman said that this, much like any other year, is where retail brands often miss the mark, wrongly focusing on Black Friday as a peak sales event rather than a longer-term opportunity.
Chris Slade suggested that the context around this year’s Black Friday could see retail brands ramp up their promotion of discounts even further.
This targeted approach requires more hands-on control over media planning to maximise campaign performance. As a result, said Cicchetti, “advertisers will need to collaborate directly with media companies; they’ll need powerful audience intelligence to better inform their media strategies and allow them to reach the right audiences with the right message at the right times.”
Luxury brands typically steer clear of Black Friday discounting due to its potential impact on their premium reputations and the high expectations of consumers. However, the Covid-19 pandemic led to an unprecedented level of discounting in the luxury sector – something that has continued amid lingering supply issues and disruptions. These pressures could see more luxury retail brands partake in Black Friday this year, and it is expected that luxury marketplaces like Farfetch and Net-A-Porter will heavily promote discounts.
It could be a tricky time for retailers on the fringes of luxury
“Advertisers can compare their first-party data to that of their partners to build highly customised audiences that can deliver a greater return on ad spend than a ‘spray and pray’ approach,” Cicchetti said. “For media companies, this data powers their addressable audience and provides a direct and authenticated relationship with the consumer. Tapping into this without compromising customer privacy will be essential for advertisers.”
Chris Slade told Econsultancy that retailers on the fringes of luxury – such as mid-range brands or retailers who typically sell big-ticket items – could struggle overall, potentially missing out on consumers (outside of luxury) who may be less willing this year to splurge for a special occasion.
“These peak shopping days are excellent opportunities to cultivate relationships with consumers,” he said. “This not only presents the chance to sell products and services, but also convert them into potential lifelong customers.”
How should marketers approach Black Friday strategy amid potential budget cuts?
“We could also see businesses reposition products as luxurious to tap into a less cash-strapped audience,” he suggested. “And brands on the fringes of the luxury category may well be the ones who struggle the most. Premium fashion and homeware retailers will have to work hard to convince consumers to make non-essential purchases.”
So, what can we expect from this year’s shopping event amid wider economic challenges? And how can marketers navigate increasingly squeezed budgets to make the most of Black Friday 2022?
But again, with customers likely to be inundated with Black Friday offers throughout the final three months of the year, we could see retail brands look to other factors, in addition to price-cutting, that could help them stand out.
However, despite total spend being predicted to fall, we could see a high proportion of consumers grab the opportunity to shop discounted products in order to maximise overall value. A recently-published Emarsys study of 3,006 US consumers found that one in five respondents plan to increase their Black Friday spend from 2021, with one in ten using the occasion to complete most of their Christmas shopping.
This is where first-party data will play a key role, particularly at a time when wider challenges are impacting consumer-brand relationships.
Black Friday deals aren’t always as they seem, with some retail brands falsely advertising discounts (i.e., when a product is regularly on sale throughout the year) or using anchor pricing to entice purchases. Gert-Jan Wijman, EMEA VP of Celigo, told Econsultancy that the current economic climate could make customers even more sceptical about supposed big discounts.
With consumers spending less overall, inventory is becoming a big problem for retail brands. The Washington Post, citing figures from the Federal Reserve Bank of St. Louis, noted that excess merchandise dragged down total US economic growth by 1.9% between April and June 2022. This has resulted in brands promoting discounts year-round rather than during the expected periods of summer and after Christmas. It is now also having an impact on Black Friday strategies, with retailers extending the duration of their sales events far beyond a single day or weekend.