Thinking beyond Black Friday

Our family hit the mall this weekend and despite all the headlines and uncertainty, people were out shopping in full force. Most stores were pushing 30-40% discounts, there was a 2-hour line for a $60 meet and greet with Santa, and parking was a nightmare.?

Here are some helpful links for the weeks ahead:

? Mistakes to avoid in Google Ads (hint: avoid budget caps and lower your ROAS targets)

? How to setup merchant center promotions to increase your CTR and CVR

? How to determine the right ROAS targets for profitability using this calculator?

What’s going on in retail?

Search volume for “Black Friday” is up over 30% YoY. Over the past week, there have been more than 55,000 unique searches for Black Friday each hour. Up +30% compared to the same week last year.?

October’s retail sales increased 1.3% compared with September (WSJ ). As prices for groceries, fuel, and housing all increased, consumers have kept the pace and continue to spend.?

However, as we’ve discussed in week’s past, many consumers have traded down in what they’re purchasing, shifting away from discretionary items to essentials and also moving towards smaller volumes and private labels to save.?

Lastly, another potential contributor may be the earlier-than-ever start to discounting and promotions which may have pulled holiday shopping forward. Time will tell.?

Total consumer debt jumped by $351 billion in Q3 , the largest nominal quarterly increase since 2007. Collectively, Americans owe a record $16.5 trillion, an increase of 2.2% from the previous quarter and 8.3% from a year ago.

Debt balance for 30-50 year olds (many of your core audiences) increased by 7% YoY, reaching $7.9 trillion dollars.

Walmart reported better-than-expected revenues in Q3 and raised its full-year outlook as their low prices continued to attract shoppers across the income spectrum. Walmart’s revenues rose 8.7% YoY to $153 billion while eCommerce grew 16% over the same period.?

“We significantly improved our inventory position in Q3, and we’ll continue to make progress as we end the year… With our Deals for Days events in the U.S. and a Thanksgiving meal that will cost the same as last year, we’re here to help make this an affordable and special time for families around the world.” - Walmart CEO

To help maintain their everyday low price and clear excess inventory, they have ramped up promotional activity considerably, launching this Black Friday is on Monday campaign , to drive more demand for holiday deals.?

CFO John David Rainey told CNBC, that consumers are buying less apparel and home goods, waiting for sales to purchase big-ticket items like televisions, and trading down in categories other than grocery, such as baby items and baking supplies.

Target’s Q3 is likely similar to most retailers as sales only increased 2.7% YoY?

Target ’s profit fell by around 50% as it cleared through excess inventory and sales slowed heading into the holidays, prompting the company to lower its expectations for the most important time of year.

Target shared many of the same themes as we’ve been hearing throughout the market, how consumers are feeling strained by higher prices for groceries, housing and other necessities. They are buying fewer full-priced items and holding out for promotions instead. To stretch their dollars, they are choosing smaller items, value packs or the retailers’ own, less-expensive brands.?

“In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty. This resulted in a third quarter profit performance well below our expectations.” - Target CEO

Strategy Corner?

I know it’s bananas to start thinking about December and beyond during Cyber Week but let’s engage in some proactive planning…

Even if you have an incredible holiday season, inventory levels are so high this year that many brands will likely still have too much merchandise on their hands.?

Coupled with the ongoing challenges in fundraising, next year could present some sticky situations for those with low cash-on-hand and higher than ideal inventory levels.?

So, through the craziness of this week, let’s not forget that many Americans continue to shop through December.?

Looking at least year’s weekly trends, consumers move out of deal-seeking mode and into gifts and finally gift cards as we near Christmas time:

Depending on the market, this could be a great opportunity to recover some margin from this week’s deep discounting and clear through more of your merchandise before we head into 2023

The tactics to do so will likely be the same: leveraging automation to capture demand at your given target and KPI, driving customers to your stores or retail partners, adding gift cards to your shopping feeds, and I really think many of you would benefit from investing into YouTube but we can save that for another day.?

That’s all for this week.?