MARKETING CREATED SHOPPING EVENTS AND WHAT THEY MEAN IN 2020
2020 . 10 . 30 |
As the clock ticks and we count down the days to the Christmas, Hannukah and other end of the year holidays, we are all unsure about how COVID-19 will affect consumer shopping. The outlook on our financial, economic and health state of being is not positive. Will people react by cutting holiday spend? Experts are polarized on what could happen. On the one hand there is significant optimism because people have not been spending money on travel or going out as they have in the past. This could bode well for those who can count on loyal clients with disposable income. On the other hand, many people have suffered job loss or reduction in income, so they will be cautious with their wallets. Discounting has started in October, earlier than ever, in some cases to lessen crowds in stores or to ensure in-stock positioning without shipping delays. But this is not the only incentive to spend.
Consumers don’t really need a reason to shop but over the past forty some odd years retailers and marketers have invented holidays that are all about shopping. Just recently Amazon held it’s 2-day blockbuster Prime Day in 18 countries around the world. This will be followed by Single’s Day, or Double 11, on November 11th, a 24-hour shopping event that originated in China. In the US, the lead up to Christmas has traditionally gotten its kick-off with Black Friday, which occurs on the Friday following the Thanksgiving holiday, only to be crowned a few days later by Cyber Monday. Estimates claim that close to 100 countries in the world participate in Black Friday – although the day has no historic value outside of the US!
Let’s assign a value to these shopping events: in 2019 Cyber Monday sales tallied $9.4 billion, a 19% increase over 2018, while Black Friday took in $7.4 billion, and Amazon’s 2019 Prime Day netted $6.9 billion. Do take into account, Prime Day used to take place in July, but this year it was moved to October and spanned two days. Even if the sales volume from these three events were combined, they are eclipsed by Singles Day which hit a whopping $38.4 billion on Alibaba’s various platforms in 2019.
How did these days come about? What key learnings can be pulled and put into action? What other predictions can provide insight on how to navigate the rest of the year?
AMAZON PRIME DAY - Oct 13 – 14, 2020
Behemoth online marketplace Amazon created Prime Day in 2015 by making special offers to Prime members at the moment of celebrating Amazon’s 20th birthday. Normally the event takes place in July, but due to circumstances related to COVID-19 it was moved to mid-October this year. As such, it replaced all other shopping days as the kickoff to the Christmas season with deep promotions. Typically brands use Prime Day to build awareness and acquire customers; it’s viewed as a marketing investment rather than a day to make high sales. Consumers have to be a member to Amazon Prime for an annual fee of $119 in the US, but just 49€ in Europe since the list of benefits varies. Membership renews automatically.
In conjunction with Amazon Prime Day, other retailers – including Nocibé, Sephora, Liberty and Selfridges – began pushing holiday shopping and promotions around mid-October this year rather than holding off until closer to Halloween, October 31st, as has been done in the past. In France, Nocibé offered a 25% discount on everything and up to 30% off on purchases over 149€. British retailers all launched their private label Advent Beauty calendars up to two weeks earlier than normal. Liberty’s has been the fastest selling reference ever in the store’s 147-year history.
In 2020 Amazon Prime Day took place in 18 countries including Turkey, Brazil, Germany, the UK and France. Digital Commerce 360 estimates that Amazon Prime Day 2020 sales hit $10.4 billion and that the Health and Beauty category represented 21% of the sales.
SINGLES DAY / DOUBLE 11
Single’s Day began back in the 1990’s at Nanjing University when a group of single men decided this was the day to celebrate being single, a date abbreviated with the number 1 four times (11/11). By 2009, Alibaba, the enormous shopping platform in China, turned it into an online shopping event encouraging singletons to splurge on something for themselves. The first event featured 27 brands and generated roughly $7.8 million in gross merchandise volume (GMV). Flash forward to 2019 where over 200,000 brands participated, over 1 million new products were launched, and the reported sales hit $38,4 billion. This year Alibaba offered help to small and medium size US brands to fast-track them to be up and running on the platform in time for the 11/11 event.
Normally this is a 24-hour event, but in 2020 a pre-warm-up began on October 29th. At this time, brands can reveal what they will offer and consumers can pre-order. This window of time will allow the brands to see the consumer reaction in case they need to modify the offer or enhance the promotion. According to a Tmall* spokesperson, fragrance has become a big trend, and people who rarely used it now have several scents including niche brands. The increase in interest is helped by the various bloggers and KOLs** who have become specialized in fragrance and who promote brands on their social sites. Although much of the promotional activity revolves around deep discounts, luxury brands participate by offering exclusive product, limited editions and generous gifts with purchase
Single’s Day has served as a barometer for consumer sentiment, especially in the luxury goods sector, in China and Asia. This year it will be a key indicator of how well China is emerging from the COVID-19 crisis. Will sales top last year’s $38,4 billion? We’ll see soon enough!
BLACK FRIDAY & CYBER MONDAY
In the United States, the Thanksgiving holiday leads to a 4-day weekend for most people. Friday, the day after Thanksgiving, became the unofficial start to the holiday shopping season because so many Americans had the day off. In the 1980’s the day was referred to as Black Friday since it was the day that many retailers passed “into the black”, an accounting reference meaning they were now posting a profit. It was also the moment stores revealed holiday decorations and windows, but these moments have been coming earlier and earlier for years.
Cyber Monday was created in 2005 as an online match to Black Friday. The idea was that on Monday, people were back in their offices, at their desks where their internet service was better than anything they had at home – if they even had anything! Consequently retailers held off on starting online sales and promotions until Monday.
Although both days have their roots in American holidays, most countries in the world have some kind of “Black Friday” and many, including the UK, Canada, France, Portugal, Sweden, India and Japan have a Cyber Monday equivalent, although the actual day it happens may vary from the US.
This year, the general sentiment is that Black Friday is going to be a non-event. People are avoiding crowded stores, retailers won’t offer blockbuster deals which create long queues, so much promotional activity already started weeks earlier, many online sites offer free shipping…..the bottom line is that there is little incentive to go out. Experts predict consumers will shop from home online or on mobile devices. Cyber Monday may also be less obvious as eCommerce has exploded since Spring.
TAKEAWAYS & ACTION POINTS
With the challenges of 2020 in mind, one wonders what we can expect and what tactical direction to take as we approach the eve of three of these shopping occasions. Opinions do point to two schools of thought: some consumers will tighten their belts while others will throw caution to the wind, spending more since they had been deprived throughout the year. However, analysts agree on a few points:
- Consumers will be looking for good deals and strong values from the brands they trust,
- The conscious consumer will support brands who share their values and who are eco-friendly,
- Brands need to rely on pushing core skus that are consistently bestsellers,
- It’s better to run a lean inventory than to be overstocked with goods that don’t move,
- This may also allow for more full priced sales and less discounting,
- There could be a renewed interest in flash sales – quick promo actions,
- Clear messaging is essential: if the best deal is during Black Friday, say so. Otherwise consumers will hold out waiting for better deals closer to Christmas,
- Convenience is key and online shopping will continue to flourish and there will be more engagement on social media platforms,
- The growth in ecommere places pressure on retailer margins due to increased logistic costs,
- Expect a surge in Click & Collect transactions in the 5 days leading up to Christmas when home delivery is no longer guaranteed.
Most shopping will be done online but people still want to see and touch goods while enjoying the social aspect of offline shopping. With the holidays upon us, now is the time for shops to step up the in-store experience to attract consumers looking for engagement and superior service. Some retailers have already put contingency plans in place in case they are deemed “non-essential” and forced to close again. It’s a prudent strategy to weather the storm as much of Europe goes back into various versions of lockdowns, and the rest of the world teeters on uncertainty. One thing we can all agree on is that we have never seen a holiday season like the one we will see in 2020. It could be the year the Grinch really does steal Christmas.
*Tmall is operated by Alibaba
**Key Opinion Leaders