Has Black Friday Reached its Peak?

Black Friday is fast approaching. Yet, you may find yourself wondering what to expect from this year’s “doorbuster” (figuratively, and occasionally literally) sales event. You’re not the only one. 2022 has brought a flood of supply-chain disruptions, countless government U-turns and a crumbling economy, leaving ambiguity surrounding this year’s Black Friday. 2021 was the lowest performing Black Friday recorded, with revenue growth down -14.3%. This time around brands won’t have to face navigating another lockdown closing their stores, but with soaring inflation and conscious consumerism gaining greater momentum than ever, will Black Friday make its comeback? Or is it on its way out entirely?

What’s driving Black Friday pessimism?

In today’s uncertain market where fears of recession are only growing stronger, predictions for what was once a highly-anticipated sales event seem to be pretty subdued. With inflation up by a massive 10.1%, customers have no choice but to tighten their purse strings. It is forecasted that spending on non-essential items during the last three months of 2022 will drop by ￡4.4bn. As wallets are squeezed, consumers who are spending are more likely to be shopping around for the real deals or sticking with the brands they know and trust. Brands who offer value beyond price-cutting alone and provide a consistent customer experience will be more likely to win this Black Friday.

Despite a fall in total spending, there could be a large proportion of consumers who seize the opportunity to grab the items they need for less and maximise their value-for-money. The “Black Friday bloat” continues to expand its waistband year on year, as Black Friday has turned into Black November. With the cost-of-living crisis deepening, 58% of consumers said they would start their Christmas shopping before November this year to help spread out the cost. As a result, some retailers began slashing their prices as early as October in order to capitalise on consumers’ prolonged spending. That being said, as the relentless sales emails through the last three months of the year start to clog shoppers’ inboxes, brands must deliver relevancy in their offerings, showing they understand exactly what and how their customers want to buy to stand out from the mobs.

Conscious consumerism is just as critical as sales this Black Friday

It’s not only the cost-of-living crisis that’s generated uncertainty. As the climate crisis becomes an urgent priority, more and more retailers are ditching Black Friday to champion sustainability instead. According to recent estimates, 1 in every 3 shoppers return what they buy on Black Friday, with approximately 30 million unwanted goods being sent back to stores. Zara recently joined Next and Uniqlo in charging their customers for returning items in attempt to combat clothing waste. The inevitable surge in returns that accompanies Black Friday is undeniably counteractive to attempts being made by the retail industry to combat the crisis. And consumers know it, too. Three quarters of survey respondents (73%) said they are considering sustainability when shopping this Christmas. ?It seems conscious consumerism is just as crucial as sales this Black Friday.

What is obvious – consumers and retailers alike are under tremendous pressure. Be it for financial or environmental concerns, consumers are spending less and are increasingly selective when doing so.

The market is highly competitive and wider challenges are having an impact on customer-brand relationships. Retailers need to be investing in understanding the evolving priorities of their customers to gain and retain. This means having access to unified real-time data to enable one-to-one personalisation and AI-backed audience optimisation to deliver a Black Friday proposition that actually delivers value to each individual customer. Marketers can avoid the ‘spray and pray’ approach Black Friday intensifies by using machine learning-driven predictive analytics to gain insights from customer behaviour that can be turned into action, understand nuances across segments, develop strategies to raise customers’ Future Value, and even predict their likelihood to return their items (not to mention, how and when they’ll return).

As for Black Friday itself, we’re as intrigued to see this year’s results as you are. Has it truly passed its peak? The possible fizzing out of what was once a day of crowd surges, stampedes and scrambling for bargains is perhaps a true exemplification of the evolving state of the retail industry. But whilst it’s still here, it should be seen as a long-term opportunity to build relationships with consumers. Retailers have the chance to sell their products and services, but also convert them into potential lifelong customers.

Need some help boosting your customer retention? Get in touch.