How To Get A Good Deal On Black Friday

Transcription

1 Market Track Perspective TM Black Friday: Navigating the Omni-Purchase Ecosystem Retailers strive to meet demands for a seamless shopping experience If shoppers thought shopping after Thanksgiving dinner was too late in 2013, they could rest easy in Holiday shoppers could knock out some Black Friday shopping with their Thanksgiving breakfast this year. Retailers from all verticals, both bricks & mortar and online, yet again pulled forward their deep holiday discounts in a race to capture the consideration, preference, and purchase of shoppers before their competition. What once was Black Friday is now firmly established as Black November. Not only did retailers pull forward their store opening times, with select retailers like Kmart and RadioShack opening Thanksgiving morning, but they also pulled forward the start of their holiday discounts overall. Early traffic numbers and sales projections suggest that the earlier discounts may have hurt results from Thanksgiving and Black Friday. The National Retail Federation (NRF) projects total spending from Black Friday weekend to fall 11% from 2013, to $50.9 billion. Additionally, total traffic all who shopped in-store and/or online was down 5.2% from The NRF has, in part, attributed the weekend decline to early discounting and more online shopping versus last year, which meant fewer people shopped over Thanksgiving weekend. Many retailers pulled discounts forward to as early as October, especially in the online space, taking demand out of the market well before the Black Friday event. In this issue of Perspectives we will explore how retailers and brands engaged with Black Friday and holiday shoppers promotionally, and how advertising and pricing activity changed from past years. We will discuss at length how retailers pulled forward their holiday sales across the board, creating a Black November rather than a Black Friday. New promotional trends will also be identified and analyzed to assist in planning for holiday All of this will be framed in the context of the shopper we will address how retailers engaged with shoppers throughout the Omni-Purchase Ecosystem, from Awareness and Consideration, to Preference and Purchase. Take a closer look In this Perspective, Market Track takes a high level look at the advertising activity leading up to Black Friday, and how retailers and manufacturers leveraged the various contributing factors to performance. There are additional, more in-depth presentations available by category, vertical and trade class. Contact us at Perspectives@markettrack.com to request more on holiday 2014: Top 10 Trends TV Analysis Hot Toy Report Win/Loss for Items at the Department, Category and Item Level Electronics Report Category Share by Retailer Social Media Review Channel/Trade Class Reports - Channel comparisons - Approach to theme - Media mix/spend - Pricing approach - Category representation - Brand leaders - Flyer/page strategies For our Cyber Week coverage, check out

2 How do I build anticipation around key events? What message types and timing resonate to build recognition? Figure 1: Share of Total Media Spending by Media Type by Week *Note that TV spend increased by at least 60% for all four retailers on the week of Black Friday versus the average TV spend of the preceding weeks, a trend that also occurred in Spend estimates for TV, Radio, Print, Online Display and Online Video Advertising are derived by first performing a hands-on review of advertising as it runs, and then leveraging a variety of resources to apply reasonable cost estimates to the advertising activity observed. Media Spending Among the most active advertisers in the weeks leading up to Black Friday 2014 were the Department channel retailers. JCPenney, Kohl s, Macy s and Sears spent significant dollars in broadcast and print media to ensure shoppers were aware of their sales early and often, and so shoppers would consider their stores in their holiday shopping plans. Figure 1 shows the week to week relative spend on TV, radio, print, online video, and online display by the four Department stores. TV and print made up the vast majority of spend within these five media types at all four retailers, though some interesting trends in spend allocation occurred as Black Friday approached, particularly at JCPenney and Sears. During the week starting 9/29, JCPenney allocated 58% of their total spend on these five media types to print, and 32% to TV, while Sears allocated 41% to print, and 58% to TV. As Black Friday inched closer, however, the spend allocated to print in early October steadily migrated to TV. By the week of Black Friday, JCPenney allocated 87% of their spend to TV, and Sears TV spend had spiked to 97% relative to radio, print, online video, and online display. The increase in TV s share of spend between these five media types as Black Friday approached indicates that JCPenney and Sears saw TV as one of the best ways to drive shoppers to their Black Friday deals. #changingthegame Traditionally a media type used more to engage shoppers in the Awareness phase of the Omni-Purchase Ecosystem using contests, sweepstakes, or other brand-building promotions, many retailers increased their use of social media to impact shopper decisions in Preference and Purchase. In Figure 2, we segmented the percent of total Facebook posts and Twitter tweets that were promotional (or had a price point, % Off, or $Off promotion for a specific category or product) during November 1st through Black Friday 2014 versus the same period in Seven of the ten retailers we reviewed increased their use of promotional posts and tweets year over year. JCPenney had the largest year over year growth by percentage in total promotional posts and tweets, increasing by 171% compared to last year. Amazon had the highest percentage (91%) of promotional tweets for the second November in a row, while Kmart featured the highest percentage (49%) of promotional posts, overtaking Toys R Us and Sears. Kohl s and Toys R Us were the only two retailers to decrease their percentage of promotional posts and tweets versus These transitions show how versatile social media can be when engaging shoppers promotionally. Leading up to Black Friday 2014, retailers trended more toward using social media to drive traffic, trial, and purchase than they did in Figure 2: Social Media Advertisements, Promotional versus Non-Promotional 2 Market Track Perspective TM

3 How do I ensure I am maximizing my reach? How does my presence in market compare to the competition? The Home Depot and Lowe s released Black Friday circulars later than any other major retailer keeping an air of mystery around their deals prior to the event. Lowe s officially released their circular Thursday, 11/20, and The Home Depot was the last to release their circular, waiting until Monday, 11/24. Figure 3: Black Friday circulars by retailer The early push for the Black Friday shopper was more pronounced than ever this year, with retailers leveraging digital media to get the word out early about their hottest deals. , social media and retailer websites announced the early release of e-circulars well ahead of previous years, where in most cases shoppers had to search the Black Friday unofficial leak sites to catch a glimpse of what would be featured on the big day. The circular is where the initial stake in the ground was placed by most retailers declaring what their hottest prices were on key traffic drivers two and three weeks in advance of Black Friday in many cases. This allowed shoppers extra time to research where to find the best deals on items topping their holiday lists and to plot their Black Friday strategy. The circular and retailer websites are still the top two ways that shoppers seek out deals from retailers, according to our Shopper Insight Survey, and retailers leveraged both heavily. Figure 3 shows the changes in volume for Black Friday print circulars. Beyond what is shown here, there were differences in between the print and digital inserts, showing retailers leveraging the different strengths of the two media types. As in the past, Best Buy opted to leverage their weekly ad online for additional offers and space dedicated to their Black Friday deals. The Best Buy digital circular released on 11/11 was very different than their print circular, with more than 150 items advertised in the digital early release that were not in their print circular. There were approximately 20 items that were in print but not in the digital release (not counting movies or alternate consoles on video game box shots). The push and pull between online and offline continues to exist, with many retailers leveraging the strengths of various media types additional space for featuring more products in the case of Best Buy. Another advantageous use of digital is in leveraging its agility. For example, RadioShack used their digital circular to reduce the price on Dr. Dre Beats headphones that ran in their Black Friday print circular at $84.99 which was higher than Best Buy s price at $ They adjusted the price in their digital circular to $69.99, the lowest promoted price in the market by $ From a messaging standpoint, the prominent theme was Beat the Black Friday Rush and Don t wait until Black Friday urging shoppers to get a jump on their shopping or run the risk of missing out on the hot deals. Once again, early openings and phased events geared towards ensuring shoppers spent their limited budgets at their store or online The Power of Market Intelligence 3

4 What are the key categories that will differentiate me from the competiton? What front page items will drive traffic and make my store/online property a destination? Figure 4: Black Friday promoted categories in the total print circular Traffic driving categories were leveraged heavily on retailers front pages (see Figure 5 below), while they used their interior pages to highlight a more diverse product mix (see Figure 4). property, and not with competing retailers, pulled the event even further forward. While getting the shopper to buy from you first is understandable from a strategy perspective, it s possible that all of the messaging around the Black Friday Rush could have unintended consequences in the form of creating aversion to the event itself. Look for our post Black Friday Shopper Insight Survey to find out how shoppers perceived these tactics. Everyone is selling everything... So how do retailers differentiate themselves in an increasingly crowded and competitive marketplace? The mix of products they promote for an event like Black Friday can make those shoppers who don t want to go to multiple stores select one retailer over another. There is recognition as to which categories and items are critical to success in driving the Black Friday shopper to your store or online property. Once again, retailers from all channels Figure 5: Black Friday front page promoted categories 4 Market Track Perspective TM

5 What are the top brands that are hot items this season? What is the right mix of brand representation to give options at all price points for different shoppers? Figure 6: Top promoted brands ranked by number of Black Friday ad blocks by retailer stocked and promoted the most in-demand products regardless of whether they traditionally sold in that product category. Electronics, entertainment, toys and games are all categories that are on most shoppers lists. They are also categories that are frequently researched and purchased online. This puts the onus on the retailer to be aware of where they are priced in relation to the competition, and with prices changing online so frequently, having a systematic way to monitor, evaluate, and take action on pricing information is critical. While the front pages of many circulars would lead shoppers to believe they can get good deals on the hot items on their list that everyone seems to be promoting, when looking at the totality of the categories promoted throughout the entire circular some differences can be seen, as shown in figures 4 and 5. For retailers that carry many categories, it is interesting to see where their primary focus is across the circular versus on the front page. If you would like to see this view for other retailers, please us at Perspectives@markettrack.com. Having the brands that are on everyone s list is also critical. When looking at the top promoted brands in the print circular across various retailers, it is clear there is a high degree of variability even within direct competitors, as seen in Figure 6. ing it in TODAY ONLY Get Early Access to Black Friday deals, Black Friday Starts NOW Online! Let the Shopping Begin, and Early Black Friday Deals on ipads and more all were subject lines in retailer opt-in s in the four weeks leading up to Black Friday 2014, a period that saw a significant spike in retailer promotional volume year over year. Retailers sent 14% more opt-in promotional s between the first week of November (weeks starting 11/3/2014, 11/4/2013) and the week of Black Friday (weeks starting 11/24/2014, 11/25/2013) 2014 compared to the same period in 2013, engaging shoppers with Black Friday deals that guided them in-store, online, into contests and sweepstakes, or to information on each retailers top deals. The Power of Market Intelligence 5

6 Who is grabbing shopper attention with compelling offers? How does the cadence of my compare with that of my competitors? Figure 7: Volume Spikes in 2014 *Retailers included: Amazon, Best Buy, The Home Depot, JCPenney, Kmart, Kohl s, Lowes, Macy s, Office Depot, RadioShack, Sears, Staples, Target, Walmart Figure 7 shows the trend of daily promotional volumes during the weeks leading up to Black Friday 2013 and Volume spiked as early as the first week of November compounding the Black November trend during which year over year volume increased 35%, reflecting the trend of retailers emphasizing earlier communication of their Black Friday deals. The largest single day disparity between 2013 and 2014 was on 11/24, the Monday of Black Friday week. 53 s were sent (within the focus group in Figure 7) on the first day of the first week of Black Friday 2014 only 18 were sent the same day in Sears, Kmart, and Macy s increased their opt-in output more than the rest of the pack in November. Kmart s year over year volume spiked just over 133% in the four weeks leading up to Black Friday Sears also more than doubled their volume this year, up 114% versus The majority of Kmart and Sears s were informational for shoppers, reminding them of sales events and times, yet they rarely called out product-specific deals. Though they did not increase their volume as did Sears and Kmart, Amazon and Best Buy did feature the most product-specific offers in their promotional s leading up to Black Friday. During the week of Black Friday alone, Amazon sent s to their opt-in shopper base with subjects lines including Up to 50% Off Toys from Mattel and Fisher-Price, 66% Off The Hobbit and The Lord of the Rings Ultimate..., and Up to 65% Off Select Sennheiser & Bose Headphones, while Best Buy attracted shoppers with product-specific subject lines such as Today Only: Save 81% on In-Wall HDMI Cable, Plus More, Today Only: Save 13% on Select Amazon Fire HD Tablets, Plus More, and Today Only: Save 38% on Sony Audio System, Plus More. Across all retail channels, was used more regularly and more diversely than past Novembers. Retailers used it as a primary engagement channel for promoting Black Friday deals starting as early as the first week of November, and for delivering information around in-store and online sales events. How omni-channel was pricing? We have discussed at length that retailers provided a more omnichannel Black Friday promotional offering than previous years to allow shoppers to take advantage of deals no matter where they made their purchase. To understand the extent to which individual retailers made their Black Friday deals available to shoppers online, we monitored the online price for each retailers top Black Friday deals on Thanksgiving and Black Friday, and compared those prices to those listed in each retailer s Black Friday circular. Those who 6 Market Track Perspective TM

7 Is my goal to drive shoppers in-store or online or both? Which of my competitors are taking an omni-channel approach? Figure 8: Omni-channel vs in-store Black Friday deals *Black Friday Circular Prices include products taken from the front and back pages of Black Friday circulars, excluding Smartphones that require contracts and products not merchandised on each retailer s website on Thanksgiving or Christmas Day showed little difference between their online prices and circular prices leveraged an entirely omni-channel strategy for their Black Friday event, whereas those that differed emphasized their instore event. Figure 8 shows the disparity in omni-channel pricing strategy between retailers and their Black Friday deals. On Thanksgiving, Best Buy and Kmart featured largely the same prices online as they did in their circular for their top Black Friday deals, each with less than 5% disparity, on average, between the online and print prices for a specific product. On Black Friday, Target joined Best Buy and Kmart at less than 5% disparity. These three retailers allowed shoppers to purchase their top Black Friday deals wherever it was most convenient for them with their purchase cycle. At the other end of the spectrum were Toys R Us and Walmart, who each had greater than 25% disparity between their online and circular prices on Thanksgiving and Black Friday. Walmart s online prices for their top Black Friday deals increased from Thursday to Friday, and on Friday were over 40% higher than the circular price, on average. By comparison, Toys R Us and Walmart s Black Friday strategy was to drive shoppers to the store to take advantage of their deep discounts, rather than driving them either online or in-store. It s all relative at least in terms of price Whether a retailer s pricing strategy was more aligned with Best Buy or Walmart, their online price for the products promoted in their Black Friday circulars were more than likely discounted relative to the price of the item in September, October, and even early November. Just as retailers leaked their circular deals earlier this year, so too can the first online price decreases for hot Black Friday items be traced back to as early as September. The Power of Market Intelligence 7

8 Does my online pricing strategy reinforce my overall approach to pricing? On competitive items that are researched online, do I have a consistent way to monitor competition? Figure 9: Average Online Price Index for Top Black Friday Circular Items *Average Online Price = 100% on 11/28/2014 **Black Friday Circular Prices include products taken from the front and back pages of Black Friday circulars, excluding Smartphones that require contracts and products not merchandised on each retailer s website on Thanksgiving or Christmas Day Figure 9 trends the average online price of a basket of top Black Friday circular products from September 1 through Black Friday. Various pricing strategies are evident when comparing the trend lines between retailers. For instance, the highest price of Best Buy s basket since September 1 was on September 10th, when the basket s online price was 39.5% higher than its price on Black Friday. Over the next two and a half months, Best Buy steadily decreased its Black Friday basket price by nearly 40%. Comparatively, Toys R Us basket never reached more than 20.2% over its online price on Black Friday, and RadioShack never reached more than 18% over its Black Friday online price. There appeared to be two extremes for online pricing strategy that different retailers subscribed to for the top promoted Black Friday products. The first is that of Best Buy, a strategy of gradual, deep discounting over the course of the two months leading up to Black Friday. The second is that of RadioShack, who kept their online price for their top Black Friday products consistently low leading up to Black Friday. Retailers like Sears, Target, and Walmart fell somewhere in between those two extremes, fluctuating price increases and decreases for their Black Friday circular products week to week. The online price fluctuations seen in Figure 9 at Target and Toys R Us were particularly interesting, given that some of those fluctuations were significant price increases. In Figure 10, we summarized the average depth of discounts between the monthly average online price of Black Friday front page circular products, and the circular price of those products. We found that certain retailers actually had a higher average online price for their Black Friday front page promoted products in October than they did in September. Toys R Us, Target, and Kmart each increased the average online price of Black Friday products promoted on the front page of their Black Friday circular from September to October. Toys R Us, for example, increased the average online price of the products promoted on the front page of their Black Friday circular from 44% over the Black Friday circular price in September, to 67% over in 8 Market Track Perspective TM

9 For key events, does my level of discount drive perception that I have the best deals? What level of discount on key items produces the most lift in sales? Figure 10: Black Friday Circular Items Depth of Discount vs. Monthly Online Price *Average price of front page Black Friday circular products = 100% **Excludes phones that require contracts and products not merchandised on each retailer s website during each comparison period October, as shown in Figure 10. Target also increased the average online price of their front page items by 8% from September to October. While Figure 9 gives great insight into the daily volatility of online pricing on key items leading up to Black Friday 2014, Figure 10 uncovers the overall direction of each retailer s online pricing for their Black Friday items. Where Best Buy dropped their average online price month to month from September to November, Toys R Us increased from September to October, then decreased from October to November. Are your competitors building their price in the months leading up to critical holiday shopping events like Black Friday before dropping them drastically just before the event? Or are they steadily decreasing their pricing on key products in the weeks and months prior? Understanding where your online price falls compared to your intended holiday sale price, and how that impacts a shopper s perspective of where your products are priced relative to competition, is essential to winning and sustaining shopper attention throughout their purchase cycle. For our Cyber Week coverage, check About Market Track Market Track is a market intelligence firm dedicated to increasing our customers returns on their promotional investments and providing real-time visibility into e-commerce pricing. We support our 850+ retail, manufacturer and agency clients through monitoring and analyzing over 200 U.S. and Canadian markets for every channel of trade, 1 billion buy pages from 3,000 global merchants, and 1,700 media channels enabling dynamic decision making by turning data into actionable insights. Key Takeaways Awareness: Tactics to engage shoppers beyond discounts alone early in the season through brand messages can help reinforce perception as an event approaches. Consideration: Having the right category and brand mix and a good balance of doorbusters to differentiated product offerings can increase the possibility that shoppers include you in their holiday planning. Preference: Well-timed, compelling offers that allow shoppers to transact how and where they choose help elevate your standing in the shoppers mind and can drive action during the holiday season. Purchase: As a shopper gets closer to the actual transaction, pricing plays a large role in their decision making. Being mindful of the dynamic nature of online price changes, and having a systematic process for evaluation, monitoring and modifying course where necessary will improve chances of increased ROI. Learn More For more insight into the entire promotional landscape or an analysis of your digital and print strategies, call Market Track at or perspectives@markettrack.com Market Track. All rights reserved.