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What’s next for retailers after the Black Friday bust?

Data is the only solution for discount fatigue.

What’s next for retailers after the Black Friday bust?
[estherpoon /AdobeStock]

As we move further into 2022 and the dust settles from holiday shopping, a couple of central questions loom for brands and retailers: Are Black Friday and Cyber Monday still industry triggers of shopper engagement, and what are the next steps for marketers as they revamp their strategies in the new year?

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In 2021, Black Friday sales were a disappointment for many retailers, doing little to move them from “red” (unprofitable) to “black” (profitable). Many are asking whether we have reached the era of nearly permanent discounting.

Last year’s Black Friday trends had some retailers offering pre-holiday sales as early as late October and early November. Many holiday sales, by a variety of names, were in full force for the entire last eight weeks of the year. The messy, hard-to-follow discounts and the months of convoluted sales strategies led buyers to spread out their holiday shopping.

My colleague, Frank Holmes, thinks a longer holiday shopping period isn’t necessarily a bad thing, pointing to the fact that the pandemic has led consumers to spread their spending habits across the year instead of waiting for holiday discounts. But for brands and retailers, the uncertainty of a predictable selling moment is just one more variable in a complex equation they must solve to plan and forecast.

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I think retailers need a different approach. Instead of counting on Black Friday promotions or seasonal discounting, companies can gather first-party data from their shoppers and target them directly and personally over time. Here’s what we know:

• First-party data, including lifetime customer value, order contribution margin and real-time customer behavior metrics, can inform ways that retail brands better serve their customers over time—and turn a profit along the way.

• Retail marketers can dig deep into their own event and transaction data to identify the buying behavior of specific shoppers. The right software can allow you to collect your own data, getting ahead of the death of third-party cookies.

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• A consolidated, comprehensive data warehouse helps you view the customer journey holistically so you can closely monitor the purchasing path. If there is a pattern or an area of concern—from operational inefficiencies and logistical concerns to pricing inconsistencies—you can quickly identify and address them to better serve your customers.

• Understanding buying patterns in detail can help you be strategic about discounts and margins instead of relying on a single shopping day to increase sales volume.

Using data to make informed marketing decisions isn’t reserved for the Amazons of the world. Thanks to the cloud, it’s cheaper and easier than ever to build a robust retail business plan based on real metrics. A modern retail data platform can be deployed cost-effectively and can centralize the information into one actionable source.

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From what I’ve seen, typical merchants today run a combination of 30 or more SaaS applications, and most can’t provide the insights needed to make informed and intelligent marketing decisions. Simplifying and consolidating the data—while also adding profit insights across orders and customer—may be the only way retailers will get ahead of shifting holiday shopping trends to become less dependent on the volatile nature of Black Friday. If you’re an e-commerce business, a brick-and-mortar merchant or some combination of both, you’ll need to be prepared for whatever twists and turns the year holds.

LEARNING FROM HISTORY

To fully understand the shopping trend, it’s important to consider how it began: The History Channel links the term “Black Friday” to a different kind of commerce: the crash of the U.S. gold market on September 24, 1869. In a 19th-century sort-of-leveraged buyout, two high-profile Wall Street financiers purchased as much of the country’s gold as they could find in the hopes of cornering the market and controlling the price. This resulted in a stock market crash, and bankruptcies for many. The notorious day it all fell apart was a Friday—a day that became known for its extreme financial misfortune.

It was not until the 1980s that the term Black Friday was assigned to post-Thanksgiving shopping. During this decade of consumerism, retailers realized that demand on this single day could make or break their bottom lines, and they initiated deep discounts to encourage foot traffic. By the 1990s, the tradition of camping out for great deals and store openings in the early morning hours began to take hold, with some states even declaring Black Friday a government holiday.

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The rise of internet shopping in the early 2000s made online retailers want in on the action, and in 2005, the National Retail Federation issued a press release introducing “Cyber Monday.” This became the day busy professionals arrived back at work, had access to high-speed office internet, and were able to take advantage of online deals from the comfort of their desks.

Of course, in recent years, the line between these two sales events has become even more blurred. Thanksgiving Day through the first Monday back at work have been dubbed the “Cyber 5.” Last year, we saw supply chain shortages driven by the ongoing pandemic incentivize an even earlier start to the season, with some retailers kicking off deals in late October.

Does this shift mean we’ll be looking at a “Cyber Season” that extends across the fourth quarter and beyond? I think we’ll continue to see a holiday season with some version of the Cyber 5, but in order for retailers to be successful in their deployment of discounts, they must be able to tailor incentives to specific shoppers at ideal moments. For Black Friday to be true to its current definition, retailers must de-emphasize the sales impact of order transactions in favor of strategies that prioritize customer profitability.

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For retail brands, end-to-end smart decision-making based upon first-party order and customer insights are the way forward.


Eric Best, CEO and Co-Founder, SoundCommerce

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