2015 was a disruptive year for the traditional holiday shopping season - Senior Director Shawna Thayer discusses the significant changes
For decades, the holiday shopping season has become bigger, longer, and more aggressive (figuratively and literally). Holiday decorations began hitting the stores before Halloween, retail advertising ramped up considerably in November, and Black Friday was continually characterized by ever deeper discounts, extended shopping hours, bulging check-out lines, and the occasional in-store disaster. Retailers then added to the shopping frenzy with Cyber Monday promotions to capture the substantial growth in ecommerce. Though the formula was considered bellicose and antithetical to the season by some, it was a winning strategy that retailers could predict and plan against, and all the big players were utilizing the same fundamental rules to win consumers' holiday dollars.
But disruption in the retail marketplace has turned this traditional holiday retail model on its side in recent years, and 2015 may go down as the most disruptive holiday season in the industry. Not only did we see substantial changes in marketing, promotion, and execution strategies across retailers, financial results suggest that customers dramatically changed their response to retail holiday marketing this season.
Black Friday now comes in a variety of colors and the results are important to track as retailers plan their marketing budgets going forward.
The Many Colors of Black Friday in 2015
Today’s multichannel customer takes a different approach to holiday shopping and retailers offered a variety of options in 2015.
- Store Operating Hours: Retailers varied widely on operating hours this year, essentially drawing a line in the sand regarding the importance of Thanksgiving Day in-store sales. On the one extreme, JC Penny opened their doors at 3PM on Thanksgiving Day (in my house, we haven’t even basted the turkey by that time). Many retailers opened a few hours later, with 5PM start times seeming most common. On the other extreme, several retailers publicized the fact that they were proudly closed on Thanksgiving Day (e.g., Nordstrom’s, Costco, Publix). REI even went as far as paying their employees to take Thanksgiving and Black Friday off to “Opt Outside.”
- Multichannel Options: One of the most notable changes this year was how retailers adapted their online and offline promotions strategy to align with new multichannel customer needs. Walmart’s approach exemplifies these changing dynamics – rather than offering various rollbacks on an hourly basis as in previous seasons, Walmart provided nearly all of their holiday promotions at once. While the Black Friday deals were not available in-store until 6 PM on Thanksgiving, savvy online shoppers could snatch up promotions online starting at 12:01 PST Thursday morning. As Walmart’s Chief Merchandising Officer, Steve Bratspies noted, “Our plan is fundamentally, make shopping easier for our customers.”
- Cyber Week: Retailers also leveraged very different strategies to extend the Cyber Monday deals all week, morphing from Cyber Monday to Cyber Week. Amazon called it “Cyber Monday Deals Week” with constantly changing promotions and products on sale for several days. Most of Best Buy and Kohl’s Cyber Monday deals remained in effect through December 5th as well. This extension may pay out big for the retailers that can afford to continue deep discounts for a few more days.
Shopper Response to the Holiday Rainbow
Overall, early reports suggest significant shifts for customer holiday spending. Preliminary estimates suggest that traditional brick-and-mortar retail sales fell by 5-10% over the holiday weekend, while ecommerce growth shattered expectations. According to ComScore, ecommerce grew 10% from last year at this time. In fact, Cyber Monday reached a huge milestone in 2015, generating over $3 billion in sales representing the heaviest ecommerce spending day in history. But the greatest growth came from mobile – preliminary estimates suggest that mobile commerce sales shot up 53% on Cyber Monday alone (totaling over $800 million). Given this new landscape, retailers will clearly need to re-think their traditional Black Friday strategies and offer up more “colorful” strategies to meet changing shopper needs.
At Analytic Partners, we look forward to measuring the short- and long-term impact of these retailing strategy shifts. The next few weeks of shopping will provide insights for our clients that can drive marketing, promotion, and operational strategies throughout the year. It’s an exciting time for retailers and shoppers alike.