How the pandemic shaped Black Friday and beyond

By Dr James McKeone, Principal Data Scientist, Ask BOSCO™ 

We can all agree that this year has been like no other. Some retailers have struggled as a result of the pandemic, but most have thrived as digital transformation becomes a part of everyday life. As digitised businesses flourish, we’re seeing the unfortunate decline of the high street, as we weave in and out of lockdowns and tiered systems that prevent consumers visiting physical stores.

The spotlight was on seasonal sales such as Black Friday and Christmas. Last year, over £8 billion was spent in the UK on Black Friday. After anticipating significant changes in line with the Coronavirus pandemic, which has created uncertainty for both the retailer and consumer, we’ve seen a successful sale period despite online competition being greater than it has ever been before. What can we take from the last few months of 2020 and what does the future hold for 2021?

What happened on Black Friday?

Following much speculation, Black Friday certainly wasn’t cancelled this year. Let’s start with the results; Black Friday itself saw a 38% increase compared to 2019 and the eight-day Black Friday week (Monday 23 - Monday 30 November) grew by 30%.

After a significant drop in consumer sentiment since September, falling from -1 to -10 in November, researchers expected this year’s Black Friday sales to fall. However, the results have proven otherwise.

In the UK, online retailers performed well overall, with increased traffic, orders and revenue. However, overall AOV (average order value) reached £105.73, down 8% YOY whereas conversion rates across retail hit 13%, up +34% this year. This could be a result of deeper discounting to attract customers, particularly those with a reduced amount of disposable income. More likely to make these larger cuts if the retailer has had a challenging year and/or looking to sell older stock.

Compared to last year, Black Friday started much earlier, and some retailers are continuing their sales post Cyber Monday. Digital marketing agency Modo25 found that competition was high and the market saturated, especially on social media, which impacted marketing costs across the board.

Some of their clients saw a substantial YOY increase in revenue, but found that 50% of customers who came through Black Friday specific keywords were new customers searching for a deal, resulting in budgets not going as far.

In terms of affiliate marketing, Black Friday saw over 930,000 sales on Awin UK and £78 million revenue tracked. Their global network of brands drove an average of 28 sales per second throughout the 24 hours period, a 20% annual increase.

Retail analysts suggest one reason for increased sales is how brands adapted their messaging with dedicated landing pages to meet consumer preferences. Implementing technology such as ‘c-commerce’ (collaborative commerce) saw peak conversation volumes during the Black Friday to Cyber Monday period grow 200% YOY.

In times of crisis, retailers were expected to understand every aspect of the consumer. By establishing a comprehensive c-commerce strategy, this gave consumers not only what they wanted to hear but what they expected from that specific brand.

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Will consumers return to the high street?

Unfortunately, high street retailers with a poor online offering have been the biggest economic casualties during the pandemic. Following the second lockdown and now the prospect of the majority of us living with on-going restrictions under a tiered system, the outlook for the high street is increasingly bleak as we head into 2021.

According to research by KIS, 61% of UK consumers foresee the end of the high street. With the news of the collapse of the Arcadia Group and Debenhams hitting the headlines, the future of the UK’s high streets has never looked more uncertain.

High street footfall is the worst performer within the retail sector, with a 63.9% decline year-on-year in November. When the second national lockdown was lifted on 2 Dec, we saw a large majority of consumers queuing for high street stores and footfall increased to 150%. Does this mean things are looking up? This seemingly large growth still couldn’t compete with previous years and was 26% lower than 2019.

In response to this, Digital Commerce 360 believe that physical stores aren’t going away anytime soon, they’re just going through a ‘corresponding transformation’. Several prominent retailers focus on blending online and in-store shopping, emphasising creating a more engaging shopping experience.

Some retailers are already adhering to this digitised future. In 2018, we saw the launch of Amazon Go, a checkout free store where customers are charged to their account once they’ve left store. In September, Walmart announced it will be overhauling 200 stores to facilitate a “digitally-enabled shopping experience.”

There is no shortage of companies investing in technology to attract and retain customers who have grown to expect convenience and personalisation, even more so during the lockdown period. It will be interesting to see how other brands adapt to this in the future.

Was it a Christmas cracker or festive flop?

Despite a positive Black Friday, retail analysts anticipated that consumers would be much more cautious with spending during the festive period.

On average, Brits planned to spend £24.2 billion on festive gifts, which was 10% less than 2019. The pandemic has ultimately had an impact on both public and economic finances, with the government rolling out and now extending the furlough scheme until April.

35% of participants questioned in Finder’s report chose to spend less due to pandemic related financial difficulties. 28% didn’t plan on visiting shops this year, so expected to spend less overall.

Unsurprisingly, less than a third of Brits planned to do any shopping in-store before Christmas after the national lockdown ended and a third of Christmas spending was forecast to take place online this year.

The amount of traffic online meant that retailers needed to ensure that they had sufficient stock with an organised delivery structure. Research from GBG’s ‘Christmas Unwrapped’ report found that over 70% said they were less likely to purchase from a retailer again should their delivery arrive late.

As many carriers have struggled to keep up with surge in parcels from online shopping throughout the year, Royal Mail planned to hire a record breaking 33,000 seasonal workers — up by 40% from last year.

It’s proven that consumers cling to familiarity during a crisis, and if you win a customer’s loyalty by catering to their needs, they’re more likely to stick by you. 70% of consumers said that they will continue shopping with and supporting retailers they relied on during the pandemic.

These findings show the importance of the customer experience and how preferences have changed since March, by removing as much friction at the checkout to ensuring that parcels arrive on time.

Customer Satisfaction

Predictions for 2021

The announcement that the COVID-19 vaccine is to be rolled out has sparked a surge in confidence among UK business leaders, according to the Institute of Directors (IoD). Just over two-thirds of business leaders questioned said news of a vaccine improved their company’s prospects for 2021.

This growing confidence will hopefully inspire businesses to explore new opportunities to adapt to a post pandemic world, as the long tail impact of COVID-19 will be felt in the retail industry for months to come.

We’ve seen direct-to-consumer boom during the pandemic, in response to the initial frustration of empty shelves in supermarkets, some food and drink giants such as Heinz and PepsiCo have grown their direct-to-consumer offering. We expect this is grow further in 2021 as sales in DTC are expected to increase by 24.3% in the US alone.

PepsiCo have recently launched an online shop in the US, stating that it tapped its technology, data and inventory to “quickly meet consumers’ evolving needs”.

Similarly, Kraft Heinz rolled out the Heinz to Home service enabling consumers to purchase product ‘bundles’ which are delivered to their home. This shift also with the rise in eCommerce, where more consumers are shopping online.

81% of B2C brands said that DTC brands have changed consumer expectations, seeking higher and more personal levels of service.

Consumer behaviour continues to change, and more purchases are being made online, much more frequently. As a result, two-thirds (64%) of marketers were focused on improving the online customer experience as part of the shift to eCommerce.

This research also found that brands are rethinking marketing strategies to engage and meet the demand of the ‘at-home’ consumer, by increasing the channels in which they sell online and investing in eCommerce technology.

Conclusion

If this year has taught us anything, it’s that a challenge presents an opportunity. The high street has been deteriorating for many years, and COVID has simply accelerated this decline, urging retailers to embrace technology sooner rather than later. From these findings, it’s clear that many retailers will have to rethink their strategies for tomorrow’s world of eCommerce, to ensure their business doesn’t get left behind.

As the online market becomes more saturated with advertising channels competing for your money, you need certainty when it comes to advertising in the right places to get the best return on your investment. BOSCO™, The Digital Marketing Prediction Index takes a domain, budget, AOV, optimisation target and a retail category as inputs and uses machine learning to map a portfolio of keywords relevant to this domain along with a competitor set, which is then used to recommend an optimal budget split for better efficiency online.

By Dr James McKeone, Principal Data Scientist, Ask BOSCO™ 

Published 05/01/2020

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