The brand has already kicked off its holiday campaign online, weeks earlier than in past years. Its Black Friday sale will take place four days early, on the Monday before Thanksgiving.
Retailers are preparing for a holiday season unlike any other. The coronavirus has upended the usual calendar, where sales starting in early November build to a crescendo of doorbuster deals designed to draw crowds of shoppers into stores. But with more shopping happening online this year – and the possibility of a second lockdown looming in some cities – many brands are having to improvise new strategies on the fly.
Chief among the challenges they’re facing: how to convince customers to spend as much online as they would have in stores, and how to get those orders to customers’ homes when delivery networks are expected to come under record strain. Their task is complicated by the fact that many have been offering deep markdowns for months to rid themselves of product that went unsold; the average discount in May was similar to past years’ Black Friday sales, according to the retail analytics firm Edited.
Many retailers are holding holiday sales more than a month before Black Friday — when they will face less competition from rivals online — and before the worst of the shipping crush. They have plenty of incentives to stage Christmas in October. FedEx has said some packages will be charged an extra $2 if they are shipped by high-volume retailers between Nov. 30 and Dec. 6. And Amazon held its annual Prime Day mega-sale in mid-October instead of the usual July, forcing retailers to stage competing discounting events.
As of mid-October, the most common advertised discount in the US was between 40 percent and 50 percent, compared to 20 percent to 30 percent this time last year, according to Edited. Last week, Walmart announced plans to reform Black Friday and Cyber Monday into a three-weekend series of promotions, both in stores and online. Macy’s, meanwhile, will begin its Black Friday deals in early November.
An earlier and earlier Black Friday, nonetheless, has been a steady trend in recent years. In 2018 and 2019, retailers were already spreading out online and in-store promotions in the weeks leading up to Thanksgiving, and carriers like FedEx and UPS were already charging premiums for peak periods.
“Prime Day was the kickoff this year,” said Mary Alderete, head of Gap marketing. “It used to be that Black Friday and Cyber Monday was the big peak but we saw last year that people started to shop earlier and more online.”
Still, no one was prepared for the unprecedented obstacles that came with the pandemic. From savvy inventory management to offering bundle deals online, retailers must find creative solutions in order to pull off an earlier than ever sales season.
Use clear messaging with shoppers
To pull off an earlier-than-usual promotion, communication will be crucial. The key message is that the early deals are the best consumers are likely to see.
“Customers need to be aware of the fact that this is the deal they’ll get now or else they’ll still expect [bigger] deals on Cyber Monday,” said Gabriella Santaniello, founder of retail consulting firm A Line Partners. She recommends emails with the taglines “Christmas in October” or “Early Cyber Monday,” and then making it as clear as possible that these deals will be the marquee markdowns of the season.
Retailers should also prepare shoppers to expect shipping delays. Children’s apparel retailer Maisonette, for instance, plans on launching a webpage that spells out when customers must order items for them to arrive in time for Hanukkah or Christmas.
Offer Alternatives to Shipping
Retailers are building their Black Friday strategies around avoiding the shipping crunch right near the holidays. One solution that’s grown in popularity during the pandemic: create incentives for customers to pick up orders themselves.
About one-quarter of consumers prefer curbside pickup this holiday season, up from 11 percent last year, according to a Deloitte survey of 4,000 people. Target’s curbside pickup service for instance has seen a 700 percent growth in its most recent quarter.
Fulfilling a purchase from in-store inventory saves brands not only the cost of shipping but also labour from distribution centre workers. Retailers can offer coupons or discounts tied to orders purchased online and picked up in stores, said Rod Sides, vice chairman and US leader in retail, wholesale and distribution at Deloitte.
“People first moved to [buy-online, pick-up-in-store] because of safety, but later, they’re doing so also because it’s faster and cheaper,” Sides said. “The question is, how can you further entice folks to choose BOPIS rather than ship to home?”
Stores can also be used to fulfil online orders, another distribution strategy many retailers adopted during the early days of the pandemic when shops were closed. Having this option available will also soften the blow if a new wave of lockdowns forces physical retail to close during the holiday shopping season, said Richard Maicki, managing director at Berkeley Research Group. It safeguards retailers from losing sales if another wave of lockdowns are imposed and certain stores and distribution centres are forced to close, he told BoF.
“We have cases where our clients are backing off promotional activity because they don’t want to risk not being able to ship all of it,” he said.
Focus on assortment and bundle up
Last year, Gap was focused on denim as one of its big Black Friday categories. This year, the retailer will also emphasise loungewear, fleece products and cosy socks, Alderete said.
When designing a holiday promotions campaign, retailers should look at how people are living, said Shan Reddy, an adviser to fashion labels, pointing to the “pod effect,” where people are socialising with a limited network of family and friends. In other words, people may be mostly staying home but they’re beginning to see each other. The question is, how can a brand frame its marketing to be a part of this consumer experience?
Santaniello points to products like slippers and bathrobe sets as products that retailers can prominently display in their stores and websites as a way to create demand. Bundling items together, she added, is another way to use product as the primary sales driver and save the brand money on logistics. She points to a Michael Kors outlet store that’s offering a deal on bundles, like a wallet-and-tote bag combination.
“When you think about specific offers, think of the idea of not just offering a deep discount on a shirt but think about if you buy these three things together then you get a better deal — an offer perfect for online,” said Maicki. The worst-case scenario, he added, is to end up shipping three different packages to the same consumer.
Discount based on current inventory levels
In the spring, the retail industry’s biggest problem was inventory. Store closures meant that spring and summer merchandise was sitting on racks untouched for months and brands were forced to offer Black Friday-caliber promotions in order to get ready for fall and winter. But many also took steps to avoid a repeat, ordering less clothing for the fall and winter.
Edited found that between September and mid-October, new fashion products are down 17 percent in the US and 22 percent in the UK year-over-year. This means that as the holiday season approaches, there will be fewer items to promote.
In some cases, promotions can be more moderate than in previous years.
“[Retailers] are running lean and mean with their inventory so I would expect not a lot that’s going to make it to the mark-down rack,” said Santaniello. “But that’s good margins.”
Black Friday, after all, exists for retailers to get rid of last season goods. Marking down on fresh or coveted items will do more harm than good. Edited compiled a list of hot-selling categories that retailers should avoid discounting, which includes knitted coordinates, jumpsuits and joggers.
Break the cycle
The best Black Friday promotion may be no promotion at all. For retailers that managed to slim down their inventories, now may be the time to begin to wean customers off their addiction to deep markdowns.
“It’s easier said than done, but it’s not just about the store saying no, we’re not going to discount,” said Reddy. “It’s also about limiting the supply. Where is the discount laid upon? Overproduction.”
In recent years, a number of brands have abstained from Black Friday, Patagonia being the most famous retailer to do so. Allbirds, in fact, is planning to raise its prices on Black Friday this year and plan to donate the proceeds.
Reddy gives the example of Burton, a snowboarding apparel line that he was trying to purchase from for years. Every season, he said he would expect the brand to go on sale, but when it does, the exact items he wanted would already be sold out. Finally, last year, he purchased snowboard bindings at full price.
“The whole industry needs to really look at how discount culture benefits them or if it does at all,” he said. “Assortment of product could be a motivator, something that speaks more to celebration rather than liquidation.”