Retail Victors and Victims in Black Friday 2023
The 2022 holiday shopping season has seen a shift in consumer behaviour, with several key factors influencing retail performance, particularly on Black Friday and Cyber Monday.
Product Availability Tops Price
Product availability has become a critical factor, surpassing price, with over half of consumers expecting inventory shortages. This has led shoppers to start holiday shopping earlier to avoid out-of-stocks.
Influence of Digital Content Creators
Digital content creators have heavily influenced purchase decisions, particularly among younger consumers (Gen Z and Millennials), who increasingly rely on creators for trusted product recommendations. Approximately 70% of shoppers made purchases based on creator recommendations.
Early and Extended Shopping Periods
Early and extended shopping periods have gained importance, as consumers begin shopping earlier than in prior years. For instance, 43% of shoppers planned to start by September.
Website Readiness and Uptime
Website readiness and uptime have become crucial to handle surge traffic during Black Friday and Cyber Monday. Retailers have invested in technology to prevent site crashes or downtimes during peak hours, ensuring smooth customer experiences.
Self-Gifting and Mobile Commerce
Self-gifting trends have surged, with 90% of consumers shopping not just for others but also for themselves. This has affected the types of products demanded, notably beauty, personal care, entertainment, and fashion. Mobile commerce, social media platforms, and AI shopping tools have also emerged as important channels.
These factors have combined to shape the retail industry's performance by influencing shopper behaviour, marketing strategies, inventory management, and technology preparedness for the holiday sales peaks.
Additional Factors
The calendar for this year includes 53 weeks for accounting-related purposes, providing retailers with an extra day for potential revenue. However, experts predict holiday spend to be up 2% to 3%, lower than their previous forecast of 4% to 5%.
American Dream, one of the largest malls in the U.S., was briefly evacuated for a bomb threat on Black Friday. Meanwhile, crowds gathered at shopping centers in several major U.S. cities to protest the Israel-Hamas War on Black Friday.
Retailers are encouraging consumers to spend on Black Friday, traditionally the busiest day of the year for the industry. Smartphones accounted for $5.3 billion of all online sales on Black Friday, up 10.4% year over year.
Despite the doorbuster deals at big-box stores losing some of their urgency, consumers are expected to engage in a retailer-consumer negotiation, with consumers waiting for the retailer to blink first in terms of offering the best deals.
The National Retail Federation estimates holiday spend to be up between 3% to 4% year over year. Michael Brown, Partner and Americas Retail Leader, Kearney, observed that while traffic was strong, the "kick-the-doors-down" traffic of past Black Fridays seemed to be less urgent.
Global data from Shopify showed strong mobile performance for merchants on Black Friday, with mobile accounting for 76% of sales. Rob Garf, Vice President and General Manager of Retail, Salesforce, noted that consumers have been patiently waiting for retailers to step up with attractive deals.
Mobile shopping is expected to overtake desktop buying this holiday season, with more than half of spend online (51.2%) on mobile devices. Many retailers expect the extra day to deliver millions of dollars of added revenue for the top line when Q4 and full-year earnings reports start rolling in early next year.
According to Vivek Pandya, lead analyst with Adobe Digital Insights, momentum and interest in shopping on Thanksgiving, Black Friday, and Cyber Monday seem to have resumed. Garf added that the store still plays a critical role in the digital shopping experience, allowing customers to buy online and pick up in or around the store when they want, under their conditions.
- The ongoing pandemic has led policy-makers to consider legislation addressing issues like inventory shortages and website readiness during peak shopping seasons, in an effort to prevent similar issues in future.
- The influence of AI in the retail sector continues to grow, with tools like AI shopping assistants becoming increasingly popular for their ability to personalize shopping experiences and offer recommendations based on individual preferences.
- With inflation impacting disposable incomes, concerns about affordability have led shoppers to shift their focus towards essential items and search for bargains during sports events, such as the Super Bowl, which have traditionally offered lucrative advertising opportunities for brands.
- The increased focus on health and wellness in the wake of the pandemic has led some consumers to reduce their spending on discretionary items, like sports apparel and equipment, in favor of investing in gym memberships and fitness trackers.
- As the threat of war between major nations becomes more real, concerns over global stability have led some consumers to cut back on non-essential spending and save for potential economic uncertainties.
