Price Points by Omnia Retail

In Omnia's Pricing Blog, our pricing experts cover all the latest trends, Omnia pricing events, customer insights and pricing strategies.

14.12.2023

Black Friday sales increase, but holiday spending looks shaky

Consumers showed their resilience once more for Black Friday 2023 amid global economic turmoil as sales increased across multiple channels, categories and markets. Shopify and Adobe all shared positive year-on-year increases: Shopify reported a 22% increase in sales from brands using its platform while Adobe Analytics shared a 7.7% increase in e-commerce sales over the total Black Friday weekend. In addition, year-on-year foot traffic for brick-and-mortar stores also saw an increase, albeit a small one, of 1.5% on Black Friday weekend. Adobe’s annual report, which covers 100 million SKUs in 18 retail categories, found five categories to be the largest contributors to this year’s sales - clothing, electronics, furniture, toys and groceries. These contributed to 60% of the €101 billion in sales from 1 - 27 November, which includes pre-Black Friday discounts during the month. By the end of the shopping weekend, discounts climaxed at 31% for electronics, 27% for toys, 23% on apparel and 21% on furniture. Small appliances and electronics like TVs and smartwatches also did particularly well while beauty and personal care saw Black Friday and Cyber Monday sales for beauty saw a 13.3% increase in year-on-year sales, as reported by RetailNext. Performance footwear’s discounts led to high sales Brooks Running was one of the performance shoe brands that reported a highly successful Black Friday/Cyber Monday period, enjoying a 14% record boost in sales on Cyber Monday alone. Omnia researched Dutch pricing data for running shoes to see what could have caused the increase in sales. Black Friday and Cyber Monday offers already began the Friday beforehand but the number of offers increased over time with the peak on Black Friday. Discount offers remain over the weekend and return to lower levels two days after Cyber Monday. Compared to the month before, Black Friday and Cyber Monday are seen as highly competitive days. On selected items, there is an average discount of 18.5%. Where some retailers and brands even go up to a discount of 28.7% on average. During this period we see different strategies of different retailers coming to life. Where some retailers and brands rely more on heavily promoted products, others that maintain their competitive strategies aren't able to discount that much. A trend we detect in the running shoe business is that brands, on average, have higher discounts, showcasing that a D2C strategy could be highly lucrative over this period. What can retailers expect about festive season spending? The state of consumer spending over Black Friday weekend should not fool retail leaders. Stubborn inflation and high food and gas prices are very much a constant monkey on the shoulders of household budgets and, even for wealthier consumers, have eaten into expendable income. Adobe reported a 14% increase in buy-now-pay-later services compared to this period last year. Cyber Monday saw a massive 42% increase in the use of these services as consumers moved to act resourcefully to make purchases. In addition, US credit card debt exceeded $1 trillion in November. Overall, although Black Friday spending was better than expected, a booming holiday shopping season will likely not be on the cards. Retailers and brands expect to see year-on-year increases, but it won’t be because of the usual holiday shopping explosion: Inflation has resulted in all-round price increases, making everything more expensive than last year, resulting in consumers spending more money for the same or less. Single-digit increases in spending of 3 - 4% are predicted, according to the US National Retail Federation, in comparison to 2021’s 12.7%. Average selling price across all categories: 2022 vs 2023: Source: Salesforce data published by Forbes Consumers expect to spend, but this will be largely due to the fact that consumers feel obliged to buy gifts over this period, and not because they want to go all-out on multiple gifts, holidays and treats for themselves. “They’ve been very resilient. They will shop. They have obligations to family and other loved ones that they’re going to fulfil the gift list for," says Michael Brown, a partner at Kearney. In the UK, festive season shopping, which encompasses both November and December, has not started as strong as in previous years: The British Retail Consortium and KPMG report that retail sales in November totalled 2.7% compared to 4.5% in 2022 while non-food items experienced a decline altogether. Moreso, PwC predicts a 13% decline in festive season shopping in the UK market, as reported by the Business of Fashion. As a result, UK retailers are expected to discount heavily in January 2024 to offset sitting stock that should’ve sold during this year’s fourth quarter. How can retailers make the most of December deals? McKinsey suggests that providing value will likely be the best strategy for retailers and brands to get consumers to shop which could mean offering same-day delivery, free shipping, product bundles, or sharper discounts. “People are heading into the new year thinking inflation is bad, interest rates are tough, there’s geopolitical conflict in the world, and that’s why consumers are so negative. They’re in betwixt, and their uncertainty is what’s keeping them from splurging,” said Kelsey Robinson, senior partner at McKinsey. In terms of sales channels, smartphone shopping for e-commerce sales accounted for a 54% majority, meaning an advertising restructure targeting smartphones via social commerce may result in higher sales. Targeting social commerce buyers may also lead to an entirely new stream of customers for future purchases.

Pricing Strategies, Shopping Holidays, eCommerce, Pricing, Black Friday

23.03.2023

E-commerce discounts: Types, benefits, and how to use them

In today's world, where online shopping is becoming more and more prevalent, e-commerce businesses need to be creative and strategic when it comes to attracting and retaining customers. One of the most popular and effective ways to do this is through the use of discounts and promotions. Uncertain economic conditions make this even more relevant: 60% of shoppers are actively seeking more coupons, offers, and discounts to help offset the higher prices they are paying across retail categories. In this blog post, Omnia explores the different types of discounts and promotions commonly used in e-commerce, the benefits they provide to businesses, and some best practices for using them effectively. An overview of discounts and promotions No matter what you call it – discount, offer, promotion, coupon, Rabat (Dutch) or Rabatt (German) – what we are discussing here is giving customers a chance to get an offered product cheaper or with an additional benefit. Let’s run through some of the typical promotional models seen in e-commerce as well as examples of the events or reasons why businesses would run a promotional campaign. Typical discount models Discounts and promotions come in many different forms, from monetary savings to freebies to rewards, and it's important for businesses to understand the various options available to them. Here are some of the most common types used in e-commerce: Percentage off: This is a straightforward discount that offers customers a percentage off the price of an item or order. For example, a business might offer 10% off all orders over $50, or a 15% discount for customers who subscribe to their newsletter. Coupons or fixed-amount discounts: Some brands and retailers offer coupons for a fixed discount, for example €10 off. Coupons are increasing in popularity, with the global mobile coupons market projected to reach $14.8 trillion by 2027. Free shipping: Many customers are deterred by shipping costs, so offering free shipping can be a powerful incentive to buy. Businesses might offer free shipping for orders over a certain amount, or for a limited time. Buy one get one free (BOGO): This promotion encourages customers to buy more than they originally intended. Businesses might offer a free item with the purchase of another item, also known as “two for the price of one”. Bundle or bulk discounts: Some products will be packaged in bundles, allowing customers to get a discount on what they would have paid for each item separately. Other times, discounts will be offered for bulk orders (e.g. buying a case of wine vs. one bottle). Loyalty rewards: Some businesses offer loyalty rewards programs to incentivize customers to purchase more frequently. They may offer special discounts or promotions that are only available to loyalty members, for example, free shipping with Amazon Prime or Zalando Plus. Some discounts and promotions are applied automatically to a customer’s cart at checkout, while others require a discount code to qualify the order for the deal. Curious about how discounts can be used in your pricing strategy? Talk to us now. Schedule a demo Examples of typical promotional events or campaigns Usually, e-commerce businesses have a reason behind their promotional campaigns, whether it be timing-related such as holidays, product-related like a new product launch, or something else: Timely discounts Time-based or seasonal promotions like Black Friday, Cyber Monday, winter holidays, and back-to-school season are common reasons for discounts to run. These tend to be high-volume time periods and brands and retailers offer promotions to win sales over competitors. Seasonal items may also be discounted during their low periods, such as swimsuits and summer sporting gear during the off-season. One example is this time-based discount for Black Friday from fashion brand Steve Madden: New products or clearance Brands may use offers to promote a new product launch, or use discounts to sell off a current item if a new or updated product will be launched soon. Promotions can help retailers to make space in their product assortment for new or higher-performing items. Nordstrom Rack has their “Clear the Rack” sales to make way for new products from brands: Data collection Retailers may run a campaign where they send a discount code to loyal customers such as subscribers or those with memberships so they can track the consumer’s behaviour and implement a data-driven marketing approach. Beauty retailer Sephora has a loyalty program called Beauty Insider that uses a points system and exclusive benefits to reward customers: Benefits and challenges of using discounts and offers in e-commerce Benefits of e-commerce promotions E-commerce companies choose to run promotional campaigns and offer discounts for a variety of reasons. Some of the benefits that can be achieved when properly executing a promotional campaign include: Attracting new customers: Offering enticing deals can reach new potential buyers and encourage them to try out a product or service. A survey from coupon website RetailMeNot found that 80% of consumers feel encouraged to buy from a brand that is new to them if they found an offer or discount. Driving sales: Promotional campaigns can stimulate sales, particularly during periods when demand might be low. According to the American Marketing Association, online shoppers who used coupons spent an average of 24% more than customers who did not make use of those offers. Increasing online conversions: Boosting conversions can be one of the biggest benefits of online offers. After using a coupon code, 57% of online shoppers said that without the discount, they would not have made the purchase. Encouraging repeat purchases: Offers can give a boost to customer loyalty, as customers may be more likely to return to a business that offers ongoing deals and rewards. A report from Vericast showed that 40% of online shoppers felt more favourable toward brands that offer a coupon or a discount, with 39% more likely to make a repeat purchase in the future and 30% saying they would be more loyal to the brand going forward. Common challenges when using discounts and promotions While discounts and promotions can be beneficial for e-commerce businesses, they can also present some challenges: Eroding profit margins: Businesses may find that discounts erode their profit margins, particularly if they offer too many promotions too frequently. Changing expectations: If they are not careful, businesses may have issues with what consumers expect. They may firstly train customers to only buy when there is a discount, which can be problematic if customers start to expect discounts all the time; or secondly, desensitise consumers to the offers so they are no longer effective. Hurting brand image: Discounts and promotions can sometimes lead customers to associate a brand with being “cheap”, which can damage its reputation and brand image. Best practices for optimising pricing strategies To mitigate these challenges, particularly profit margin concerns, and capitalise on all the possible benefits, businesses need to use strategic promotion management and follow best practices for optimising their pricing strategies. What does good promotion management look like? No matter if you are a retailer, brand, D2C, or marketplace, it starts with making targeted pricing decisions depending on the market you are operating in: Are your categories and articles seasonal? Are your customers price-sensitive? Do you have overstock? Using questions such as these to set high-level goals will help ensure your promotions have the impact you’re hoping for. What can a brand or retailer do to create promotional programs without sacrificing profit margins? Motivate a repeat purchase: Offer a coupon after the transaction, or give a discount if they become a newsletter subscriber so you can keep in touch. Use a loyalty program: Encourage customers to join your loyalty program rather than just offering one-time coupons. Offer tiered coupons: Instead of a flat percentage discount, encourage customers to spend more to save more by tiering coupons. For example, €10 off €50 or more, €20 off €100 or more, €50 off €250 or more. Incentivise customers to make referrals: Ask shoppers to refer new potential buyers in order to receive their discount. Offer subscriptions: Subscription or membership-based programs capitalise on customer loyalty and can give you recurring revenue. Have a reason – Giving consumers a reason for the sale or discount – whether that be a holiday, product launch, or new loyalty program – can keep expectations in check and avoid customers demanding those prices year-round. This happened to US retailer JCPenney, who decided to move away from a constant “sale” setup and lost customers who were angry about the change. The role of psychology in promotional pricing Consumer behaviour is, of course, impacted by psychology, and it plays a significant role in the world of e-commerce discounts and promotions. Understanding the psychological aspects of pricing can help businesses to ensure they choose the right promotional strategies for their target audience. One well-known example of this is price elasticity: as price increases, demand falls. This is the foundation of why businesses offer discounts in the first place – because according to price elasticity, decreasing the price increases demand. However, this is not always the case, and it is good to know the price sensitivity of each product.Another psychological factor at play is around behavioural economics and how consumers view different types of savings. A majority of consumers would rather “get money off” (e.g. €10 off) versus “save money” (e.g. save €10). The reason comes down to linguistics: “saving” money implies the avoidance of loss, while “money off” implies consumers gain something from the offer. They may be saying the same thing, but “money off” is a more positive (and impactful) message. How to use dynamic pricing tools for promotional pricing With dynamic pricing tools and systems like Omnia Retail, users can integrate multiple internal data sources such as season, stock level, contribution margin, distribution channel, and compare data to competitors to calculate the optimal prices. Easily apply unique discounts to different assortments and product groups. Discounts in the form of a coupon or “rabat” code can be used for different products where a retailer runs a specific pricing strategy. Read about more interesting blogposts here: What is Dynamic Pricing?: The ultimate guide to dynamic pricing. What our the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

Pricing Strategies, Retail Trends & Research, Shopping Holidays, Pricing, E-Commerce

01.12.2022

Christmas Gifts in 2022: A Conundrum of sustainability and capitalism

A large part of the festive season is buying gifts for friends and family, as well as ourselves, with the November to January period being retail’s most profitable and chaotic time of the year. With inflation and the increased cost of living causing drawbacks in spending in the European and UK market since February, retailers and e-commerce players alike have been anticipating the gifting season to boost yearly sales and revenue. Something that retailers also have to contend with each year is new gifting trends, basket loading, and increased returns; creating a tornado where retailers try to meet consumer demands as well as keep their heads above water regarding returns and sustainability efforts. Ahead of the festive season, we’re exploring gifting trends, how e-commerce and brick-and-mortar stores can better manage returns, and other aspects of this time period. Gifting trends for 2022 Shopping and finding inspiration on social media Instagram, TikTok and YouTube aren’t just platforms for people to share their holiday photos and video tutorials. They’ve become multi-billion Dollar virtual businesses that push content using algorithms to make sales. Social commerce, as it is now called, is expected to be valued at $1.2 trillion by 2025. Users of the platforms are not only shopping from them, but they are using the platforms for gifting inspiration. The same way people use online reviews as a testing ground for a product, more and more consumers are using social media to research a product or brand. In fact, according to a Sprout Social report on the common ways people find the perfect gift, 40% of consumers are seeing organic posts from brands and another 34% are researching a product on the platforms. Limits on spending This year, the average consumer in the US and the UK will spend roughly €1,100 on holiday gifts, while shoppers in France, Germany and Spain will spend approximately €405 on gifts during this season. These numbers are still considerable, however, it is a far cry from what families used to spend in the years leading up to the pandemic. According to a new survey done by Retail Economics, 51% of shoppers are imposing spending limits on gifts for Christmas this year; while 90% of low income shoppers are setting limits as opposed to 68% of the most affluent shoppers. Personalised gifts After facing and surviving the life-and-death reality of a global pandemic, many people are turning to personalised gifts for loved ones to show how much they care. This includes engravings on jewellery, imprints of initials on leather items, sandblasted champagne flutes, handmade gifts and more. The personalised gifts market is set to grow by 7.8% per year over the next five years, reaching €36.9 billion in 2027. Who’s offering extended return policies over Christmas 2022? Because retail is so reliant on the festive season for hitting targets, moving inventory and making profit, shoppers have more power than ever when it comes to returns over Christmas and New Year’s; enjoying extended return policies. And, what many retailers and consumers may not know is that leniency on time actually reduces returns more than any other returns policy factor. Here are just some of the companies offering extended return policies: ASOS, an online clothing and accessories retailer, is giving shoppers up to 2 months and 10 days to return an item. If you shopped between 14 November - 24 December 2022, you have until 24 January 2023 to make a return. Amazon’s Christmas returns extension is from 7 October - 31 December 2022, offering shoppers up to 31 January 2023 to return. H&M allows purchases between 14 October 2022 - 3 January 2023 to be returned until 31 January. GHD, a global hair care brand, allows purchases between 1 October - 24 December to be returned until 14 January 2023. Patagonia has no deadline for purchases being returned. Banana Republic allows returns for purchases made between 1 November - 31 December 2022 to be returned until 31 January 2023. Ralph Lauren’s extended returns policies allow purchases Investing in technological upgrades can reduce the rate of returns The process of a shopper returning an item has never been an easy and affordable part of the logistical chain. For many years, the industry-standard of offering “free and easy returns” has fulfilled consumer demands, however, it has left an ever-increasing hole in the pocket of D2C brands and retailers; so much so that global brands are ushering in a new era of limited or charged returns. In recent weeks, Zara, J. Crew, LL Bean and Dillard’s in the UK began charging a fee for mail-in returns, while Kohl’s in the US has stopped paying for a return’s shipping costs. CNN Business reports that some retailers are considering refunding shoppers for their return and letting them keep the item because the cost of a return is too much. In addition, these same retailers don’t necessarily want returned stock because they have mountains of excess inventory already, from gym apparel to home decor. In the US alone, the cost of shipping returns amounted to $751 billion, according to the National Retail Federation, while the number for online shopping alone is $218 billion. Although free returns remain a top factor for choosing a particular retailer, some consumers are enjoying the Black November discounts and the extended returns policies so much that they’re ordering one item in various sizes or colours, such as a coat in medium and large, and then logging a return on the size that doesn’t fit. This practice is called “Bracketing” and it is the result of shoppers taking advantage of free returns; not trusting sizes online; or opportunistically buying an outfit for a single event and then returning it (which is also known as wardrobing). If every shopper did this, retailers would be paying for one return on every order with their free returns policy. On average, the returns process costs twice as much as the delivery process, making bracketing and wardrobing unsustainable for a business and even more so for the environment. So, how can retailers minimise the cost of returns? The obvious reason would be to start charging for returns, which would cut down on bracketing and wardrobing significantly. However, the less obvious choice that also improves the customer experience would be to invest in technological and informational upgrades on products online. Dr. Heleen Buldeo Rai, an author and researcher at the Vrije Universiteit Brussel in Belgium, who has researched and written extensively on the topic of sustainability within e-commerce, shares in a literature review entitled “Return to sender? Technological applications to mitigate e-commerce returns” that using internet-enabled tools and data analysis to improve product information may result in fewer returns. For example, some D2C beauty brands are making use of an AI tool that allows a buyer to take a photo of their skin tone in real-time to match it with an exact shade of foundation. A case study Dr Buldeo Rai references sees online clothing stores in China make use of virtual fitting rooms where you can try on an item of clothing using an AI model with your personal measurements. In this case study, returns decreased by 56.8%. Other technologies include colour swatches, video product reviews, and zoom technology, which has shown that just one unit increase of zoom usage leads to a 7% decline in the odds of a consumer logging a return. By focusing on improving the customer experience with technological upgrades and features, fewer returns will result in lower overhead costs and a lower impact on carbon emissions. Christmas spending may be lower in 2022, while a better returns system is on the horizon Christmas shopping in 2022 is not expected to be as abundant as previous years due to ongoing inflation and increased living expenses, however, retail can still expect shoppers to make good use of discounts, extended Black November sales, free shipping and free returns. As a pull-in for customer loyalty, it is understandable why retailers would want to keep free returns as an option. However, unless retailers and e-commerce pure players prioritise a new customer experience to reduce returns, it will continue to be an expensive headache, totalling $642 billion per year as it currently stands. Overhauling the returns process will also improve retailers’ environmental impact. A study conducted by Dr Buldeo Rai shows that just under 80% of consumers are willing to wait longer for a delivery or to collect their own purchase. With this kind of information, retailers can offer better delivery and returns options that are easier on their pocket and the environment.

Shopping Holidays, Consumer Behaviour

23.11.2022

Black Friday 2022: Our predictions and recommendations

Each year, avid shoppers look forward to the annual Black Friday shopping event, which kicks off the holiday gifting season, where brands and retailers reduce prices on items from electronics to jewellery to levels that inspire crowds in their thousands. Around the world, shoppers who may not be able to afford certain products, or feel that they are getting a better deal than the usual price, can now make a purchase, or a consideration at least. Consumers who find shopping for items like dishwashing liquid a tedious task may buy in bulk on Black Friday to avoid it being on the shopping list in future, which is also known as pantry loading. Whichever category consumers fall into, Black Friday attracts people from almost every socio-economic background, making it retail’s favourite day of the year. As we await Black Friday in 2022, which officially falls on 25 November, it takes little effort to see that this year’s event may be quite different to that of previous years, considering record-high inflation has hit Europe in the jugular since the start of the Russia-Ukraine conflict. Despite mixed reports on how this year’s Black Friday will go, Sander Roose, CEO and founder of Omnia, predicts there will still be many retailers and brands who are aggressive in their discounting strategy for the fact that they are holding excessive stock and, quite possibly, because they feel inclined to discount heavily as they know they are dealing with inflation-stricken consumers. However, some studies are showing consumers to be spending more now than before the arrival of Covid-19 as people grapple with surviving a life-and-death reality. Let’s take a look at this year's Black Friday predictions in comparison to previous years, and if high inflation is a strong enough deterrent for consumers. Market predictions for Black Friday in 2022 London-based e-commerce researchers IMRG have found unimpressive results in their data collection. Previously, over the years, IMRG has found that Black Friday is the pinnacle of retail’s fourth quarter trading period. In 2022, it is estimated that not only will Black Friday not be as abundant as previous years, growth estimates are at -5% in comparison to 2021. The clothing, home, beauty, garden and electrical markets are not expected to see any growth this Black Friday. Other than inflation and low confidence in the economy, there’s another factor influencing Black Friday spend this year - the FIFA World Cup. Some retailers predict that a global focus on the games may negatively impact shopping on Black Friday weekend, with 34% of 118 retailers thinking it will reduce shopping, according to an IMRG survey. However, if retailers and e-commerce stores are smart, especially those in clothing, sporting apparel and electronics, they should see this global event as a golden opportunity for them to curate their marketing, deals and the customer experience to include the World Cup theme. Regarding the general feeling towards Black Friday from consumers, a survey from Zendesk gives a more positive outlook, showing that 4-in-5 consumers are more excited than ever for this year’s Black Friday and that the increases in living costs are propelling them to bigger deals and discounts. This behaviour isn’t new, suggest Dan Thwaites and Patrick Fagan, who are the founders of Capuchin Behavioural Science. "A rise in stress, or mortality salience, has been equated with a rise in purchases of ‘escape products’ such as beer or status products like luxury watches, reflecting the thought, often ascribed to Epicurus, ‘Let us eat and drink, for tomorrow we die,’” says Dan. However, consumers should be wary of spending brashly, as a new investigation by consumer watch group Which? found that 9-in-10 Black Friday items on special were the same price or cheaper in the six months prior to the shopping event. Comparing the EU, UK and the US Despite inflation and higher living costs, Europeans have experienced an overall increase in their purchasing power-, or expandable income, since 2021 due to the reopening of economies, businesses and tourism. GfK’s study on the average purchasing power per person per year in Europe sits at €16,344 - an increase of 5.8% compared to last year. However, there are giant differences between some countries regarding their spending abilities. For example, Liechtenstein’s purchasing power per capita is €66,204 while Ukraine’s is €1,540, so although spending abilities have improved, not every European may be seeing or feeling it. This is evident in the year-on-year decrease in holiday spending in specific European countries, which includes Spain, whose purchasing power was below the continental average: Source: Statista 2022 Filip Vojtech, a geo-marketing expert at GfK predicts that the increase in purchasing power amongst Europeans may not necessarily translate to retail purchases this Black Friday and the festive season, as the uncertainty regarding inflation and high energy prices is keeping many Europeans conservative with their money. In Germany, for instance, Horizont reports that Black Friday shopping is expected to be low this year, as consumers are more interested in saving. If bargain hunters do shop, 76% of them want to place a larger focus on planned purchases and price-centred campaigns, instead of hurried buying for the sake of buying. In the UK, the same IMRG study found that 47% of retailers believe that the stress of increased cost-of-living is enough to deter shoppers from eagerly shopping on Black Friday weekend. However, another 43% of retailers said that today’s higher bills will actually pull consumers into Black Friday spending so that they can make good use of heavily discounted products. Nevertheless, the spending will be less spontaneous and more considered. In this instance, we could say that the state of consumer spending on Black Friday in the UK may look similar to Europe. Source: Statista 2022 US consumers provide a unique - albeit complex - case. McKinsey reports that, although they are concerned about inflation and have historically low confidence in the economy at the moment, American shoppers are also showing eagerness to spend and have remained robust and confident spenders in the last few months, as retailers like Home Depot and Walmart have reported. American consumers are also expressing a higher sentiment for the holiday season this year than they have in a few years. The Consumer Pulse Survey conducted by McKinsey shows that 55% of US shoppers are excited about holiday shopping, which traditionally begins with Black Friday, and have the savings to spend. In addition, consumers across the Atlantic are so excited about holiday spending that their usual wait for Black Friday specials is creeping back a few weeks with 56% starting their spending in October. Black Friday: What’s selling, who’s taking part and who’s not in 2022 Lower volume sales means bigger discounts As Sander predicted, certain categories have experienced lower sales this year than they had planned. This is due to an overwhelming global demand starting in 2020 that retail leaders thought would spill into 2022. However, global demand for items from e-bikes to washing machines has slowed down, and retailers will be ambitious to discount considerably. Products in the luxury small domestic appliances (SDA) category, like a Nespresso coffee machine, and products in the luxury major domestic appliance (MDA) category, like a SMEG gas stove, will likely not see major sales this Black Friday, which is not surprising since their popularity this year has been lower and in decline compared to 2021. However, because their volume sales have been low this year, these are the items that retailers will be desperate to get rid of and will likely have the biggest discounts. GfK says that standard and basic SDAs like TVs and cordless vacuum cleaners, which have already received a 15%-plus price cut this year, will be the biggest targets for larger discounts this Black Friday. Products in the tech and electronics category, such as headphones, smart watches, bluetooth speakers and more, will also see the biggest discounts, as reported by the New York Post. High-income earners won’t feel the pinch Despite 43% of global consumers believing now is the time to pull back on non-essential spending rather than jump straight in, high-income earners who aren’t necessarily affected by inflation and high living costs will still continue to enjoy Black Friday spending like previous years. Premium products in the luxury domestic appliances category mentioned above will still be supported by premium buyers. Gen Z has higher demands for Black Friday discounts Black Friday is retail’s favourite day of the year to get rid of stock at drastically low prices, however, some age groups, like Gen Zers (born 1997 - 2012), require retailers to offer a minimum of 41-50% of a discount for them to want to participate. The other, older age groups - Millennials, Gen X and baby boomers - require between 21-30% of a discount to consider shopping. This may be so for two reasons: The more obvious reason is that Gen Z shoppers are often in high school, in university or have recently entered the working world, meaning their expendable income is lower than the older age groups. The less obvious reason, which took some research on our behalf when looking at Gen Z’s buying behaviour, is that Gen Zers are far less concerned with fitting in when it comes to shopping, and prefer choosing a brand that separates them from the crowd, unlike Millennial shoppers. They are also more likely to spend money on a brand that values authenticity and sustainability. Typically, it is large-scale retailers and global brands that dominate Black Friday offerings, and not the smaller, lesser-known companies who are not focused on pushing inventory and creating a product at the cheapest price possible. A product would, therefore, need to be heavily discounted for the average Gen Z shopper to consider buying it. FOMO (Fear of missing out) and ego-boosting behaviour From a psychological point of view, Dan and Patrick share that events like Black Friday trigger emotionally-charged consumer behaviour. We may still see confident spending from consumers who are simply shopping because they feel they might be missing out if they don't. "The thought of deals disappearing triggers this fear of loss, making us feel we have to act,” says Dan. “Simply making something look like a sale can be enough to trigger the behaviour,” Dan continues, such as using the colour yellow which has been studied as being an influential colour for discount offers. “Even though the product is no cheaper, people buy more. This is due to representativeness bias. If something looks like a duck and sounds like a duck, we think it’s probably a duck. Same with discounts - even if they’re actually not.” When one does in fact find a good deal after doing some research online, consumers tend to feel as if they have “gotten one over the store,” as Mark Ellwood says, author of Bargain Fever: How to Shop in a Discounted World. “And it's also really fun. You didn't know it was dopamine surging through your brain. But you still come out of the store, and you're grinning, and you're thinking, 'That was amazing.' We should have that moment all the time,” continued Mark to CBS News. This sentiment is further expressed in the academic paper “The Excitement of Getting a Bargain: Some Hypotheses Concerning the Origins and Effects of Smart-Shopper Feelings" by Robert M. Schindler from the University of Chicago who says that “Just as ownership of a product may have many different types of consequences, so also there may be different types of consequences resulting from the price a consumer pays. This includes the implications which a price may have on the consumer's self-concept. Paying a low price for a particular item might lead a consumer to feel proud, smart, or competent.” In the name of sustainability, some brands are giving Black Friday a miss In an effort to sway shoppers from shopping in excess or to encourage them to focus on recyclable materials, some global brands are not offering Black Friday sales, while some have created their own spin on it. Ikea launched a campaign called #BuyBackFriday which asks customers to bring their used furniture for resale instead of throwing it away. Fjällräven, a bag and outdoor apparel brand, uses the event to remind people who long-lasting their products are, instead of hyping people up to buy another coat. Shoe brand Allbirds actually increased their prices on Black Friday in 2021 by $1 and gave the money from each purchase to Fridays for Future, an organisation focused on climate change. Monki, which owns H&M, will not be offering Black Friday specials at all. Black Friday becomes Black November To lure in foot traffic or to get rid of stock volumes; either way, global brands and retailers (both online and offline) have extended a one-day event into days and weeks of Black November specials. Globally, we see that the annual shopping event began changing years ago, with the introduction of Cyber Monday at first, and then the rapid move to online shopping during Covid-19 lockdowns. For the first time ever, in the US, during 2021’s Black Friday event, there was a decline in year-on-year growth by $100 million. This may be because 49% of consumers took advantage of the earlier specials on offer throughout the month of November, according to the America National Retail Federation. In addition, the total number of Black Friday weekend shoppers fell from 186 million in 2020 to 179 million in 2021, showing again how consumers are choosing to enjoy discounts and deals earlier on. Specifically, Target launched their Black Friday sales in mid-October - more than one month before the official event. Amazon teased shoppers with its October Prime Day, a warm-up to Black Friday. Adidas and Nike launched their strategies more than a week before the event, offering between 15-50% off. How can retailers make the most of this year’s Black Friday? Start your Black Friday deals earlier As mentioned above, the Black Friday festivities are beginning in early November and sometimes in October. According to a PwC study, 43% of shoppers choose the earlier Black November deals to ensure items are in stock. Another 37% shop earlier to make sure their purchases are delivered in time for the festive season; and 31% do it to avoid the large crowds. Introduce dynamic promotions With dynamic promotions, you are constantly (and automatically) surveying and evaluating your competitors’ prices and your volume sales, even throughout the chaos of a sale, so that your promotional strategy maximises revenue, maintains competitiveness among the sea of Black Friday sales, and better moves inventory from warehouse to consumer. Treat this year’s event as a test one can learn from Although each year is proving to be different, it would be wise for brands and retailers to look at their marketing and promotional strategies to see what worked in 2021 and what didn’t. Going forward, each year should be treated as a study that can be learned from. Optimise the in-store and online experience In-store digital media, additional discounts for shopping online, multiple delivery options, email sign-up discounts, stock volume and delivery updates… There are many ways to help consumers enjoy their Black Friday shopping experience even further. Consumers tend to remember the brands that went the extra mile in creating a positive shopping experience. Take the opportunity to cross-sell to increase revenue Specifically for retailers in clothing, sports apparel and electronics, creating bundles of products that compliment each other may drive up revenue and entice shoppers to spend. For example, creating a Black Friday bundle discount on a smart watch with wireless earphones; running trainers with exercise equipment; winter coats and boots; and so on. Lessons for Black Friday 2022 Although there are remaining questions on shopper turnout for this year’s Black Friday weekend, one thing stands firm: Retailers and brands are ready to offer big discounts on sitting stock, with the largest deals taking place in the tech, electronics and domestic appliances categories. This strategy rings true across all major markets, including the EU, US and UK, despite the US showing the highest levels of consumer excitement around Black Friday shopping. In the EU and UK, inflation and high living costs remain a potential blockage for retailers to experience the shopping rush of Black Fridays in the past.

Shopping Holidays, Consumer Behaviour, Black Friday

20.10.2022

As retail awaits higher spending this festive season, brick+mortar enjoys a comeback

Inflation may be the top-of-mind issue for retail and e-commerce players alike, but a new and surprising trend that should maintain morale and a robust attitude is seeing the sharp decline in store closures in the US and UK. In addition, the holiday season is set to bring increased spending compared to 2020 and 2019, despite an increase in the cost of living and a decline in confidence in the markets. Adobe Analytics expects global holiday season shopping to reach €938 billion this year, making the festive season retail’s favourite time of year. Omnia takes a look at why brick-and-mortar is experiencing a smoother ride versus previous years, and what we can expect for 2022’s holiday spending. 2022 is the year brick-and-mortar rallied Two years into the global e-commerce boom that has been predicated on Covid-19 lockdowns and stay-at-home restrictions, e-commerce players have been taken aback by the sky-rocketing growth - and matched demand - for shopping online. However, now that most of the world has opened up and lockdowns are a thing of 2020, pent up demand from consumers has resulted in another trend: Brick-and-mortar stores are seeing more openings since pre-pandemic levels in 2019. Today, store openings in the US and the UK are higher than store closures, showing a surprising reversal in the years leading up to 2020. Coresight Research has tracked retail store openings and closures in the US and has seen a year-on-year 55% decrease in store closures from September 2021 to 2022. Some of the factors include overwhelming demand from consumers to get out and shop; higher demand for premium real estate spaces, such as in Manhattan, and financial incentives for tenants during the pandemic when real estate was floundering. In the US alone, 2022 has seen 5,000 new store openings, including brands like Hermes, Gap Inc and Deichmann. In the UK, PwC reports that store closures have significantly slowed down since 2020 and 2017 with an average of 34 closures per day in the first half of 2022, compared to 61 per day in 2020. Despite the successes of brick-and-mortar stores this year, the reasons and conditions for its success can’t be expected to last. As consumers return to normal, pre-pandemic life, the desire to shop won’t last, especially since inflation is the highest it's been in the US, UK and the EU in decades. In addition, since demand for high-end retail spaces has reached bidding war levels, rent will increase and financial incentives won’t be on offer anymore. For the upcoming holidays, e-commerce and brick-and-mortar will receive a welcomed boost among inflation Retail’s favourite time of year is around the corner, and festive season decorations, deals and promotions are already filling Instagram timelines, shopping aisles and Bol.com carts. With a whirlwind last two years dealing with unpredictable markets and evolving consumer behaviour, one thing remains a sturdy, reliable bench for retail to rely on: Holiday spending. Consumer spending is expected to see an increase in 2022, which bodes well for brick-and-mortar stores as well as e-commerce shops. PwC reports that consumer spending for the upcoming holidays in December will increase by 10% when compared to the same period in 2019 - the very December that saw some of the very first cases of Covid-19. Spending will increase by 20% versus spending in 2020. What else can we expect from consumers this festive season? An average of €1,472 will be spent this holiday season, which includes gifts, travel and entertainment An average of €777 will be spent on gifts; €465 on travel; and €230 The highest spender is expected to be a young male living in the city Consumers will spend more money on themselves this year as well as their families compared to previous years In terms of age groups, millennials (approximately 24 - 40-years old) will spend the most, at an average of €1,878 while Brands with loyalty cards, programs and credit cards can expect 79% of millennials to use them for their associated brands Household annual earnings more than €123,000 will likely overspend on their holiday budget by 15%, taking their holiday spending to an average of €2,840 - double that of the average mentioned above A majority of of consumers, 41%, will wait until late November for the best holiday deals The ever-surprising consumer If there’s anything retail can learn from consumer behaviour this year, it’s how resilient and robust shoppers are, despite rising living costs and a changing retail landscape. One of the attributes of the improvements and predicted successes discussed in this article are the attitudes and motivations of consumers, which remain unpredictable in the best way possible. As retail heads into the holiday season, and brick-and-mortar store openings remain steady, consumers will be watched closely for the next trend in offline and online shopping.

Shopping Holidays, Consumer Behaviour

30.12.2020

Amazon is closing in on Dutch competitors

In short: Web giant Amazon is putting Dutch web stores under pressure with rock bottom prices. Thousands of popular products are 7% to almost 18% cheaper at Amazon than at competitors such as Bol.com and Coolblue. At the level of the individual articles, large Dutch web shops regularly compete with Amazon. There are several indications that Amazon's market share is growing. You can find a link to the original Dutch articles below this translation. Who will enter the prize fight? Thanks to competitive prices, Amazon has managed to conquer market share and significantly reduced its gap with established rivals such as Bol.com and Coolblue. In the past three months, the American web giant was often the cheapest on a variety of products, according to an analysis that we did for the Dutch news channels BNR and the FD. In 2019, web giant Amazon opened their Dutch web store, after years of speculating. After that it became quiet around the Americans, but nine months later the Amazon effect is clearly visible, says Sander Roose of Omnia Retail. His analysis of thousands of frequently sold products shows that Amazon.nl is on average considerably cheaper than large Dutch web stores. "For example, Amazon tries to build an aggressive price image and steal market share." In the past three months, Amazon's most popular products - including many electronics and toys - cost an average of 7% to 9% less than the same products at Bol.com and Mediamarkt. The price gap with Wehkamp and Coolblue was completely large: Amazon.nl was respectively 15% to almost 18% cheaper in recent months. At the level of individual articles, it can be seen that large Dutch web stores regularly enter the battle. If Amazon.nl is pricing an iPhone on the market very cheaply, they will temporarily go just as low. 'Amazon is the cheapest, but Bol.com in particular is really playing the game', says Bart Zoetmulder of DPG Technology, which keeps track of prices via the Tweakers and Hardware.info websites. In the weeks before Saint Nicholas (Sinterklaas), the prices of consumer electronics on Bol.com and Amazon.nl crept towards each other, says Zoetmulder. "In October the price difference was about 6%, but only 0.9% at the end of November." Gain market share There is not a major price war yet. No major Dutch web store has structurally lowered its prices to the level of Amazon.nl, according to the analysis by Omnia Retail. On the contrary: in the course of the year the difference with the Americans increased. 'This year the corona effect was greater than the Amazon effect,' says Roose. "Online sales have taken off since corona." As a result, there is little need to lower prices. 'But after corona these differences can start to hurt.' Moreover, web stores can hardly keep up with orders, experts say. Earlier this year, Coolblue had to increase prices due to the massive run on office chairs and keyboards to prevent shortages. It still maintains relatively high price tags (about 8% more than usual). Whether the bottom prices of the American shopping platform will have the desired effect cannot be said with certainty. Market shares of web shops are unknown. Yet, there are indications that the gap with Bol.com is closing. On price comparison sites, consumers click through to Amazon.nl as often as to Bol.com, says Roose of Omnia Retail. "That is a signal that they are gaining market share." In addition, the number of visitors to Amazon has doubled in recent months, research firm Vinex noted. Last November, Amazon's reach was 7.3 million Dutch people. That is more than Coolblue, Mediamarkt and Wehkamp, but not as much as Bol.com. The well-known web shop subsidiary of Ahold was visited by 11.6 million Dutch people in November. That is roughly every Dutch person with an internet connection. More products, lower prices In terms of assortment, Amazon.nl is much larger: since March the number of products has doubled to 200 million. Bol.com now sells 30 million articles. In a response, Bol.com says it barely notices anything from 'another web store', and studies show that price is not everything. Service, quality and a wide range of delivery options are also important, says the Ahold division. Coolblue and Amazon did not respond to questions from the newspaper. Dutch web department stores can now afford even higher prices, says Onno Oldeman of price consultancy Simon-Kucher: "Margins were above average this year, and people buy products under € 50 at the trusted Bol.com. Amazon is quite a bit abroad. The tipping point is at a price difference of 10%". At the same time, you should not underestimate the Americans, the price advisor warns. "Amazon is diligently trying to get a foot in the door here. The Netherlands is difficult for them to enter. But if Amazon really manages to make a name for itself as the cheapest, you know they have the longest breath, the deepest pockets, and the greatest buying power. It could take years, but eventually they will win. " The original articles: Financieele Dagblad BNR

Retail Trends & Research, Amazon, Shopping Holidays, Featured

19.11.2020

Holiday Playbook 2020

E-retail sales eclipsed $3.5 trillion in 2019 and Cyber Monday sales hit 9.4 billion. The ecommerce trend continues to dazzle retailers who are excited to offer goods yet struggle competing with behemoths like Amazon. In the US alone, Amazon’s hold on the ecommerce market has risen from 33.9% a few years prior to 38.7% in 2020! Amazon continues to dominate ecommerce as well as dictate related trends followed by medium and smaller competitors, especially during the holiday season. Black Friday falls on Nov. 27 in 2020, but the associated sales have already begun. Amazon is offering deals on popular products, even matching Prime Day prices. Walmart’s holiday promotion period began much earlier this year, even before November 4th promotions. Anxious shoppers are beginning to see more signs that they don’t have to wait for Black Friday or Cyber Monday for deals. It’s a message for online suppliers too - don’t wait for the holidays, for 2020 holiday pricing strategy has already begun. Thanksgiving weekend, the once official “start” of the holiday shopping season has been abandoned for online shopping opportunities that can’t come too soon and are too good to let pass. Understanding how to compete and pivot pricing has never been more vital for businesses. Read our 2020 holiday pricing playbook: Learn how previous holiday shopping trends inspired the current state of 2020 holiday shopping Better Understand 2020 holiday shopping trends - the who, what, and how Get actionable tips on gaining traction in your market and attracting more sales this 2020 holiday season. There has never been a better time to be an online supplier yet your products and services will get lost in the 2020 holiday rush without proper strategy. Get the right insight to not only compete but crush the competition. Previous Holiday Shopping Strategies We studied 2017 and 2018 holiday shopping trends, and conducted a full analysis of what happened in the 2019. The top 150 sellers experienced a major price drop compared to the week before Cyber Week. The prices of top products dropped by (at least) 50% compared to the Friday before Cyber Week. Many products (not in the top 150 sellers) also had attractive price drops: The data shows large fluctuations in price during Cyber Week, a great time for consumers to take advantage and suppliers to price strategically. 2020 Holiday Shopping Outlook Covid-19 has impacted the world in countless ways this year. Distancing regulations has propelled many more shoppers to seek regularly purchased and one-off goods online. 36% of consumers now shop online in a weekly fashion. That’s a 28% increase compared to times before the pandemic. 72% of consumers will spend the same or more this holiday shopping season as compared to 2019. More than a third will do (almost) all of their shopping online compared to 25% in 2019. 62% of US consumers will start shopping early to avoid crowds and 33% want to complete holiday shopping much earlier this year. So, being visible and setting prices right are just two of a broader list of concerns for retailers accommodating 2020 holiday shoppers who are not waiting for Thanksgiving weekend this year. Holiday Pricing Strategy 2020 Figure a Minimum Price Considering major brands like Amazon and Walmart have begun adjusting ecommerce prices for the 2020 holiday season, you’ll need to pay attention to the depth of associated discounts if you want to compete for popular items. Making pre-holiday buying more appealing to consumers, some suppliers offer storewide promotions, slashing prices throughout a physical location or ecommerce site. In 2020, major e-tailers are not waiting for the end of the month to start holiday pricing strategies. That means competing with promotions that are deeper, widespread, and longer than before. The following questions help figure your minimum pricing to help compete with competitor promotions. Does holiday shopping trends of 2020 influence my costs for shipping, raw materials, agreements with supplies? Can you benefit from making bulk purchases this season? Do I need to pay seasonal staff? For holiday overtime? Are third-party (dropshipping) prices fluctuating during the holiday season? What are the costs of shipping in 2020 vs prior years? What is the importance of digital marketing this year given the pandemic and YoY increased trust in e-shopping trends? Create Great Experiences 67% of customers are willing to pay more for a better experience. And, if they have a good experience, 72% of customers will tell their friends. Great experiences spread through social networks like wildfire...but so do negative ones. 62% of customers share negative experiences with others, and 57% of consumers have switched to a competitor company that offers a better experience. Form a customer journey map to identify pain points and highlight particularly enjoyable ones. Use the feedback in sales and marketing material. Here are simple yet effective questions to ask customers: How did you first hear about our brand? What problems are you trying to solve in relating to our product/service? Have you made a purchase with us? What was the deciding factor? Offer Free Shipping 62% of US shoppers say they'll start 2020 holiday shopping earlier to avoid crowds. Retailers need to rethink the usual timelines for Cyber Monday and Cyber Week to help shoppers who are already looking for special offers and deals this October. In a holiday survey, 72% of participants said they plan to take advantage of free shipping. 44% plan to take advantage of easy returns and 42% are in it for price matching. The same survey found the top three reasons participants chose to shop online over in-store were convenience, saving time, and free shipping. To confirm this sentiment, a 2017 holiday survey showed 21% of consumers claimed free shipping will have the biggest influence on their holiday shopping decisions. Make It Easy for First-Time Online Shoppers 69% of US shoppers plan to shop online for the holidays, with more people going online to browse and buy for the very first time. Due to the trend toward online shopping, 2020 retailers will need to be ready to offer helpful, frictionless holiday shopping experiences for an increase in first-time online shoppers. In March 2020, 88% of online shopping orders were abandoned. Automotive had the highest cart abandonment rates out of all measured categories with an 96.88% abandonment rate. One thing you can do to ensure customers make a purchase is to reduce their level of stress or fear. One study found that about 60% of ecommerce sites ask “unnecessary” questions that induce feelings of discomfort. It’s a matter of perception. The question may be valid but that reason must be evident to the user and/or later addressed by the seller. Expand M-Commerce Options In 2021, 53.9% of all retail e-commerce is expected to be generated via m-commerce. As of February 2017, Amazon was the most popular shopping app in the United States with a mobile reach of 40%, ranking ahead of local competitors Walmart and eBay. The average value of smartphone shopping orders in the United States as of fourth quarter 2016 amounted to 79 U.S. dollars, compared to 98 U.S. dollars per online order via tablet. Being unique while offering similar products is a struggle for many ecommerce sites. However, infusing more mobile commerce options helps new brands appeal to audiences who embrace easy ways to transfer money, make contactless payments, etc. Consider the following mobile-commerce-friendly options: Allowing for mobile money transfers Integrating your site with mobile banking Offering contactless payment and in-app payment options Offering location-based offers Providing mobile coupons and e-loyalty cards Prepare to Be Seen for the First Time With a third of US shoppers having purchased from a brand that was new to them during COVID-19, shoppers are ready to discover new brands and retailers as they shop for what they already know. To connect with new or repeat customers, retailers should get their products front and center with shoppers on the lookout for ideas and inspiration. Social media is a far-reaching and immediate way to make an impact. 321 million new people joined social media in 2019, which brought the total from 3.48 billion to 3.8 billion social media users (an increase of 9%) in 2020. But, don’t assume making a great impact comes easy. 80% of companies online are under the impression they deliver exceptional social media customer service, while only 8% of their customers agree. Conversely, customer happiness is at the core of Amazon’s success. Amazon developed a strong brand based on convenience and pricing. A 2019 survey of 2,000 US shoppers found 89% were more likely to buy products from Amazon versus any other e-commerce provider. 66% start their search for new products on Amazon, compared with 20% who start on a search engine such as Google. When consumers are ready to buy a specific product, 74% go directly to Amazon. Take Advantage of Dynamic Pricing Some suppliers easily compete with larger players via dynamic pricing. In general, automated software allows for smaller-scale operations to compete with an Amazon or Walmart by reflecting sale prices in real time. Amazon shapes ecommerce pricing trends as more retailers seek to keep pace with Amazon’s fickle price changes. However, historical trend data helps you know which products people search for in the weeks leading up to the holidays. Start your holiday pricing strategy well before the holidays through data analysis and identifying which of your products will be popular on Black Friday. Plan strategies for these products and spend Black Friday monitoring performance. Take that data a step further with automation tools that provide automated price checks and automated price updates. These tools save valuable time and allow for increased focus on strategy than manual labor. The Larger Picture of Pricing Strategy Amazon strategic pricing is a global issue for competing e-retailers. The company’s goal is to capture as much consumer data as possible, and Amazon’s reach is limitless. Our research suggests Amazon adjusts its prices on a per-country basis. Last year, we looked at the top 100 Amazon best sellers across 300 categories and discovered the American company had the lowest prices on 27% of the market in Germany and 42% of the products in the Netherlands. An analysis across 300 categories showed: Prices in the UK are 3% higher than the Netherlands Prices in France are 2% higher than the Netherlands Prices in Germany are 7% lower than the Netherlands Amazon dominates in terms of market share. The company has 47% of the market share in the United States, 47% of the market share in the United Kingdom, and 31% of market share in Germany. Since Amazon NL launched, it dominates comparison shopping engine Tweakers. In fact, Amazon NL has more than double the number of out-clicks on Tweakers as Bol.com, its next biggest competitor. We also looked at the number of price changes on Amazon NL vs. other Dutch retailers. Amazon.nl’s average number of price changes is represented by a dark orange line — the one that far outpaces any other retailer in the Netherlands. We also looked at Amazon NL’s average price ratio compared to the rest of the market. Amazon NL (the dark orange line at the bottom of the graph) dominates. Conclusion With Covid-19 as catalyst, Deloitte predicts e-commerce holiday retail sales to grow between 25% to 35% from November through January 2021, reaching $182 billion to $196 billion. The undeniable national and global momentum of ecommerce sales makes a holiday pricing strategy imperative in 2020. But the larger picture depicts this once seasonal shift in pricing strategy and demand for ecommerce supplies becoming more of the norm throughout the entire year. Moving forward, retailers need to compete with the pricing strategy of Amazon while continuing to differentiate between the nuances of what makes a brand unique and what is lucrative in offering in 2020. 77% of US holiday shoppers say they intend to browse for 2020 gift ideas online, not in-store. With more purchase decisions being made online, retailers will need to bring the best of their store online and be ready to help customers complete their purchase. About Omnia Omnia was founded in 2015 with one goal in mind: to help shops take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help stores save time on tedious work, take control of their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading brands and retailers, including Philips, Decathlon, Tennis Point, Bol.com, de Bijenkorf, and Feelunique. Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily.

Retail Trends & Research, Shopping Holidays

18.11.2020

Holiday Playbook 2019

When it comes to Black Friday, your price matters a lot. In fact, according to Google, pricing and promotions are 13% more influential in the week leading up to the third Friday in November. Black Friday primes people to buy, but they also expect deep discounts on items. But just because people expect discounts doesn’t mean that you need to award them for every product in your store. As a pricing company, this is our area of expertise. So to help you think more strategically about your price on Black Friday, we did an analysis of market prices from the last two years. Some results were surprising, and some results were exactly what we expected. But all of them provide valuable insights into the weeks leading into Black Friday, and can help you build a more strategic plan for the day. Keep reading to learn more about how Black Friday has changed over the last two years and get some expert tips on how you can make this year’s holiday season more profitable. Price increases and decreases As a retailer or brand, you no doubt feel pressure to decrease your prices on Black Friday. But is this the right strategic move? We were curious, so we analyzed whether there were any price increases during the period leading up to the retail holiday and on the day itself. Our results showed that prices don’t just decrease on Black Friday and in the weeks leading up to the date. Sometimes they increase, contrary to popular belief. 2017: Week Preceding Black Friday Price Increases and Decreases 2017: Black Friday Week Price Increases and Decreases Price increases can happen for a number of reasons, and there’s no data that can give us a definitive answer on when or where a price increase will occur. One possible explanation though is a matter of strategy. Retailers might rationalize that consumers are willing to spend on Black Friday regardless of the price, and may raise prices to capitalize on the “buying fever.” Another possibility is a response to supply and demand. As different retailers sell out on stock, competitors might naturally raise prices as a response to the more limited market-wide supply. Price decreases still occur 1-2x as often as a price increase, but look out for price increases on the day itself. This increase could signal an opportunity for you to lift your prices to capture more margin. Alternatively, you could decrease prices to undercut the competition. Black Friday vs. the preceding week: what does the data show? How does the week before Black Friday look compared to the week of Black Friday itself? Our analysis showed that the number of price changes increased for every single category we looked at. 2017: Price Changes Week Preceding Black Fridaylack Friday Week Price Increases and Decreases In the week before Black Friday 2017, prices changed on: 23% of products in the Baby category 23% of products in the Health and Beauty category 32% of products in the Computers and Electronics category 24% of products in the Home, Garden, and Living category 20% of products in the Sports, Travel, and Outdoor category 28% of products in the Toys category 2017: Percent of Price Changes in Black Friday Week In Black Friday week though, the number of price changes was significantly higher. From the 20th to 26th of November 2017, prices changed on 28% of products in the Baby category 27% of products in the Health and Beauty category 32% of products in the Computers and Electronics category 27% of products in the Home, Garden, and Living category 22% of products in the Sports, Travel, and Outdoor category 28% of products in the Toys category 2018: Percent of Price Changes in Week Preceding Black Friday 2018 told a similar story. In the week before Black Friday 2018, prices changed on: 18% of products in the Baby category 18% of products in the Health and Beauty category 33% of products in the Computers and Electronics category 25% of products in the Home, Garden, and Living category 20% of products in the Sports, Travel, and Outdoor category 22% of products in the Toys category 2018: Percent of Price Changes in Black Friday Week However, Black Friday week of 2018 also saw an increase in the number of products that experienced a price change. The graph above shows changes on 26% of products in the Baby category 27% of products in the Health and Beauty category 36% of products in the Computers and Electronics category 28% of products in the Home, Garden, and Living category 25% of products in the Sports, Travel, and Outdoor category 25% of products in the Toys category Pricing pressure Pricing pressure has increased across the board over the last two years, and the number of product prices that change on Black Friday rises each year. The Consumer Electronics category has always been at the front of the price-changing revolution. As a highly elastic category with lots of vendors, it’s traditionally been a place where retailers need to compete heavily on price. Our analysis showed that Consumer Electronics shows no signs of slowing down. The number of price changes on the market in the period before Black Friday increased over the last two years from 32% to 36%. Consumer Electronics: Black Friday 2017 vs. Black Friday 2018 Who is catching up? Consumer Electronics leads in the number of price changes for Black Friday. But are other categories catching up? Our analysis showed that the Baby and Beauty categories both experienced price changes on 27% of their assortment in 2018. This is surprising because both categories have passed the Toys category, which is another traditionally high-pressure category. Toys typically change price on 25% of the products on the market. There are also several other categories that show rising pricing pressures. Retailers and brands in the Sports, Travel, and Outdoor categories will probably experience a growing price pressure in the coming years. Overall, we are well on the way to one in four products experiencing a price change on Black Friday itself (or in the weeks leading up to it).

Retail Trends & Research, Shopping Holidays

06.12.2019

What 3,903 Products can Teach us About Cyber Week Discounts

While Black Friday has traditionally only been the last Friday of every November, an increasing number of retailers and brands are starting sales much earlier. This trend of starting sales as early as the Monday before Black Friday is known as “Cyber Week” or “Black Friday Week.” The sales are getting bigger, the week is growing longer, and consumer anticipation of the event is growing. And the tactic seems to be working. BBC reported that Black Friday 2019 gave retailers a “welcome boost” this year. As reporter Ian Westbrook writes, Barclaycard, which processes nearly £1 of every £3 spent in the UK, says that sales volumes from 25 November to 2 December were up 7.1% compared with 2018, while sales value rose by 16.5%. The UK isn’t the only country where records shattered this year. In the United States shoppers spent 7.4 billion dollars, the most ever on Black Friday and the second-highest spending record ever, only slightly trailing 2018’s Cyber Monday record. So while Black Friday’s popularity is clearly growing, and Cyber Week becomes more important, many consumers want to know...are the deals actually that great? We were curious, so we dug into our data and analyzed almost 4,000 popular products throughout Cyber Week to see how prices actually changed. This data set compares the lowest price on the Friday before the start of Cyber Week (November 22nd, 2019), to the lowest price point during Cyber Week itself (anytime from November 23rd-29th). The results were interesting, but not altogether surprising. Keep reading to find out what we learned about the Cyber Week market. The top 150 products had a price drop of more than 50% during Cyber Week The first data point we found was that the top 150 sellers on the market experienced a major price drop. At some point during Cyber Week, the price for these products dropped at least 50% compared to the Friday before Cyber week. Brands that were in this category include Nintendo, Samsung, Canon, Max Factor, Lego, L'oreal, Maybelline, Fisher Price, Intel, and more. However, many products that were not in the top 150 sellers also had attractive price drops. Take a look at the table below to see some popular products that had steep price cuts: Apple MacBook Pro (15" 512GB) - 32.35% drop Apple iPad mini (Wi-Fi, 64 GB - 19.54% drop Sony FDR-AX100 4K Ultra HD Camcorder - 20.03% drop Samsung C27FG73 (27 inch) Monitor - 57.73% drop Nintendo Switch Lite, Standard - 58.56% drop FIFA 19 - Standard Edition - 30.83% drop Mario Kart 8 (Standard Edition) - 26.82% drop Xbox 360 Wireless Controller - 25.74% drop Canon LEGRIA HF R806 Camcorder - 25.12% drop Football Manager 2019 (PC) - 24.49% drop Samsung SM-T580 Galaxy Tab - 22.43% drop Amazon Echo (2nd Generation.) - 27.50% drop Canon IXUS 190 Digital Camera - 27.31% drop Microsoft Surface Pen Platinum Gray - 21.18% drop PlayStation4 - Console (500GB, black, slim) - 12.76% drop Canon EF-S 18-200mm - 81.52% drop The data shows that the market does change significantly during Cyber Week. There are large fluctuations in price, and opportunities for great savings. But is the price cut really that great? When you compare Cyber Week prices to those of the Friday before, the price slashes seem enormous. But if you zoom out and look at historical prices, are the discounts really that great? Take a look at the graphs below. Each graph shows the historical price of a different product, each of which was advertised heavily on a major retailer’s website during Black Friday. You can see the average price of these products week-by-week for September, October, and November. Finish All-in-One lemon-scented dishwasher tablets Finish All-in-One Grease Fighter Tablets, 100 pack Oral-B Genius Electric Toothbrush You can probably already see an interesting trend: the prices at the end of November during Cyber Week certainly dip...but they don’t dip too far below the three-month average low. This trend is also true for longer periods of time. Look below at the analysis of Gillette Fusion Proglide + 6 razorheads from June to the end of November. The price during Cyber Week is actually somewhat higher than the price in late August! Gillete Fusion Proglide + 6 razorheads This means that Cyber Week promotions for these products weren’t that much different than regular promotional periods during the previous months. So while buying on Black Friday is advantageous, the discount might not be “special” for consumers. Artificial inflation Another trend you can see across all of the above products is a price increase in the weeks leading up to Cyber Week and Black Friday. This means that certain retailers may artificially inflate prices before Cyber Week to make the discounts seem steeper. In other words, a “50% discount” during Cyber Week may not be accurate for average market price of that product throughout the rest of the year. This is a sales trick, and it may be intentional for many retailers. It pushes people to buy because consumers feel they are getting a better deal during Cyber Week than at any other point during the year. However, many retailers may not do this intentionally, but instead don’t know the historical average price for that product. Without access to historical data trends, retailers and brands simply don’t know how a product has been priced over the previous months. Instead, they follow market prices to keep up with the Black Friday frenzy...and don’t understand the discounts they give are not that steep. This presents both a problem for retailers and consumers. Consumers can quickly lose trust in retailers who engage in this practice. And it’s become a large part of the news cycle every year to “debunk” the actual savings around Cyber Week. But for retailers and brands who don’t know whether they’re offering a good discount or not, the effects can seriously damage the bottom line. If your store understands how steeply you can discount, you can plan a much better game in the week itself. Final thoughts While price drops can be huge during Cyber Week, the price slashes might be more of a marketing trick than a real saving. However, just because price discounts aren’t as steep than regular promotional periods doesn’t mean shopping on these days is a complete waste. These are promotional prices - so it’s worth taking advantage of the discount. Additionally, many retailers combine promotions with different perks like free shipping or buy-one-get-one-free offers. If you’re a consumer, the best way to prepare for Black Friday is to start price-watching ahead of time. If there is a specific product you are searching for, keep your eyes open for price drops in October and November.

Pricing Strategies, Retail Trends & Research, Shopping Holidays

14.11.2019

Take Control of Black Friday with These 3 Pricing Tips from the Experts

Is Black Friday even worth it? That’s a question that many retailers and brands ask themselves around this time of year. Is it worth all the trouble? The early starts. The late nights. The number crunching. The price watching. The long days and the short rests in between...Black Friday is stressful and resource-consuming... So is it even worth it? The answer is a resounding yes — if you’re strategic about it. People are primed to buy on Black Friday, and as a retailer, it’s a shame to discount the psychological power this holiday has on consumers. Many consumers will surf the internet just to see if there is a deal available, and even if they don’t intend to buy, many will walk away from the day with one or two items. There are plenty of ways to infuse strategy into your Black Friday game plan. But as pricing experts, we wanted to talk about what we know best: how to price effectively on Black Friday. We ran an analysis of all of our market data to uncover some trends about Black Friday for you. In this post, we’ll discuss the data, highlight important trends, and give you tips on how you can make Black Friday more profitable with the information you have. Black Friday pricing pressure: should you change your prices? When it comes to Black Friday, your price matters. A lot. In fact, according to Google, pricing and promotions are 13% more influential in the week leading up to the last Friday in November than at any other time of the year. But just because people expect discounts doesn’t mean that you need to slash prices for every product in your store, nor is it what the market actually does. We analyzed the top 100 Amazon bestsellers in 300 categories to see how different price points reacted during Black Friday 2017 and 2018 and looked at a few things. First, we looked at trends over the last two years and determined if there were any categories where pricing pressure was growing. Second, we compared the number of price changes by category for the week before Black Friday to the number of price changes in the week of Black Friday itself. The results were interesting, and the analysis proved our hypothesis that the number of price changes is increasing across the board each year. And that number of price changes shows no sign of slowing down. How to win this Black Friday How can you make Black Friday a success? The key is to use data strategically to build strategies ahead of time. Here are our top tips for getting the most out of this Black Friday. Pick your battles To build a battle plan, you need to consider two questions: 1. Do Black Friday promotions match my commercial strategy? You won’t be able to respond to every price change that occurs on Black Friday...nor should you, necessarily. You need to know when to react to the market, but you also need to know when to not react because it will be detrimental to your brand perception. To figure this out, go back to your commercial strategy. If you want to be seen as a premium brand or retailer, for example, you might not want to cut prices the same way someone who wants to be the kind of shop with the lowest-price-for-everything would. You could unintentionally drive the overall market price down, and no matter what, you’ll always be undercut by competitors whose goal is to be a cheaper alternative. 2. Where should I apply promotions? With your commercial strategy at the top of your mind, consider how Black Friday can actually help you achieve your company’s goals. One of the easiest ways is to narrow down which categories you want to focus your time and energy. You can’t realistically tackle every category with the type of energy it requires to maximize profits on every product (that is, unless you’re using an advanced dynamic pricing software). Your team isn’t a machine that can work 24/7 without losing their sanity. To be effective, you should be selective in where you target your team’s energy. You might want to run a promotion on all Consumer Electronics, for example, or on any other subset of your assortment. You can then focus wholly on running that promotion effectively. Price increases and decreases You don’t always need to decrease your prices on Black Friday (or in the week leading up to it). Our analysis uncovered that many shops actually increase prices during Black Friday week, though price decreases were still 1-2x as common. There are a couple of explanations for this. One is that retailers and brands might run a margin optimization strategy to capitalize on increased consumer willingness-to-spend around Black Friday. These price increases could also be a response to supply and demand. If one shop sells out of a popular item, other shops in the market might increase prices as the supply shifts. Finally though, many of these price increases might just be the result of a lack of data. Shops might not even know their prices are higher during Black Friday than the week before because they can’t keep track of their price changes. Whatever the reason these price increases occur, you should watch out for them in the week of Black Friday. They are an opportunity for you to react. You could lift your prices with the overall market to capture more margin, for example, or you could decrease your price to stay underneath the competition. Use the right data Every year countless news outlets publish “exposes” that show Black Friday deals aren’t as steep as most consumers believe. But does that stop consumers from buying? Definitely not. Black Friday brings in more and more sales each year. For the most part, retailers and brands aren’t trying to take advantage of consumers during Black Friday. It’s actually because shops don’t have the proper data to know whether a product’s price was lower in the last month than what they advertise on Black Friday. Data like historical trends help you know the long-term market price for popular products over the course of several months, so you can make sure your Black Friday price is lower than the historical average. You need roughly three months worth of historical data to understand what the lowest price of the product has been. Historical data also shows which products people search for in the weeks leading up to the holidays so you can guess which products will be popular on Black Friday itself. Another data source that’s interesting to use is price elasticity. If you understand how different products and categories respond to changes in the market, you can prioritize which categories need the most attention. Finally, competitor pricing data is always useful, but especially so for Black Friday. Without competitor pricing data delivered directly to you, you can’t monitor the market effectively. You can take that data a step further with automation tools like automated price checks and automated price updates. These tools save valuable time so you can focus more on strategy. Increase the frequency of your price changes Black Friday is one of the most competitive days of the year, if not the most competitive day. To stay in the game, you need to shift your prices as quickly as the rest of the market. Our analysis of the top 100 Amazon bestsellers across 300 categories shows we’re headed toward a Black Friday standard where of one in every four products experiences a price change. That’s roughly 7,500 products from that analysis alone. Some categories have already surpassed that 25% threshold. We discovered the most competitive categories in terms of price are: Consumer electronics (36% of products experienced a price change in Black Friday week 2018) Toys (28% of products experienced a price change in Black Friday week 2018) Baby (27% of products experienced a price change in Black Friday week 2018) Health and Beauty (27% of products experienced a price change in Black Friday week 2018) There are also a few categories that are showing significant upward trends. Shops in the Sports, Travel, and Outdoor categories will quickly pass this threshold as well. It’s impossible to keep up with these price change frequencies if you don’t use some form of pricing automation tool. More companies realize this and switching over to dynamic pricing as a result. Final thoughts Black Friday might not seem worth all the trouble. But when you use data to build strategies that serve your company’s goals, the retail holiday offers the potential for excellent sales growth.

Dynamic Pricing, Pricing Strategies, Shopping Holidays, Black Friday

08.03.2019

How Retail Seasonality is Changing

The seasons have always been a powerful influencer of retail, but do they still matter with the rise of e-commerce? In short: yes, the seasons still influence retail. Though the type of influence is changing drastically. In this post, we’ll explore this “new” seasonality brought in the rise of e-commerce, and examine how you can adjust your strategies to match these changes. Two types of seasonality in retail Not all seasonality is the same, and it’s important to illuminate the different drivers of consumer spending. Seeing seasonality as two separate categories (holiday-driven seasonal shopping and climate-driven seasonal shopping), will help you understand your sales data and optimize for the next year. Seasonality and the holidays “Holiday shopping” is something that retailers can safely count on, regardless of where they are in the world. As long as you’re tuned in to your market’s holiday calendar and understand the history and traditions of a place, you can somewhat accurately predict high-traffic times of year. Some examples of holidays that drive traffic across Europe include Christmas, New Year’s Eve, and Valentine’s Day. You can plan on consumers shopping around these holidays, and can prepare your assortments accordingly. You can also go down to the local level and look for holiday traffic there. Here in the Netherlands, the weeks leading up to King’s Day are a great time to sell anything orange. Regardless of what the weather forecast says, the vast majority of Dutch people will celebrate on April 27th in full orange regalia. While a rainy day might mean celebrations move inside, the weather has little-to-no influence on how consumers prepare and shop for the holiday. Some categories are more influenced by the holidays than others. For example, you can almost guarantee that jewelry and chocolate sales will rise in early February for Valentine’s Day, regardless of the weather outside. Depending on the holiday, themed products are a great way to drive extra sales. Retailers can safely bet that reindeer-themed products will sell in December, heart-shaped boxes will trend in early February, and pumpkin-themed items will be popular around Halloween. Seasonality and weather Even though retailers can count on a certain amount of holiday traffic, the type of products people buy at different points in the year can vary greatly depending on the climate. Take, for example, the Christmas holidays. Here in Holland (and in most of Northern Europe), we associate Christmas with cold weather, warm fireplaces, gluhwein, cozy sweaters, and snow. The reason is obvious: the weather in this part of the world is typically cold around this time of year. This isn’t true for much of the world. Consumers in the southern hemisphere are in the middle of the summer when Christmas rolls around, so shoppers can have completely different associations of the holiday. If you’re in Auckland or Sydney, you might spend your Christmas Day on the beach, not tucked away under blankets with a steaming mug of hot chocolate in your hand. A side effect of this climatic difference is that you’re far more likely to find a Christmas-themed swimsuit in Sydney than in Stockholm or Oslo. You also don’t have to travel all the way to Sydney to see a change of climate, and even within Europe seasonal temperatures and weather patterns vary. Holiday-themed items aren’t the only products swayed by global weather differences. Certain categories are especially susceptible to weather changes, and are in fact even driven by the change of seasons. The most obvious category affected by this “climate seasonality” is fashion. Traditionally, a store‘s physical capacity limited what products brick-and-mortar fashion retailers could carry. They sold swimsuits in the summer, then as the season tipped over into the colder weather for fall and winter, they’d swap out swimsuits for cozy socks, thick sweaters, and heavy coats. But this seasonal cycle, much like retail itself, is changing in the 21st century. Talk to one of our consultants about dynamic pricing. Contact us How retail seasonality is changing The seasons are still a major driving force in retail, especially for calendar holidays. And while they won’t disappear from your sales cycle calendars, the idea of a retail season is shifting for several reasons. Rise of online shopping Online shopping has changed retail in more ways than one. However, what’s notable for the discussion of seasonality is that retailers are no longer limited by the four walls of their physical store. This has an impact on the notion of ‘seasonality’ – particularly when applied to weather. Because online is naturally more nimble than brick-and-mortar, it is far less reliant upon the traditional “seasons” to drive sales. The online model means that retailers can react almost instantly to changing market conditions and fluctuations in supply and demand - which can occur daily, if not hourly. Today, no matter the season, retailers can sell any kind of product they wish. As long as they have a warehouse to hold and process products and orders, there are no limits on what they can sell. Now, a consumer can buy a swimsuit in the dead of January and get it shipped directly to their home in just a few days. Changing consumer behavior As retailers have become less concerned about limits on their products, so have consumers. Today’s shoppers won’t even bat an eye when it comes to ordering something “out of season” online. Instead, consumers expect to be able to find whatever they want, whenever they want. This is especially important for retailers to know as out-of-season shopping rises. One of the drivers behind this change is the fact that travel has become significantly less expensive in the last 25 years. There’s been a 300% increase in the number of overseas trips taken since the mid 1990s, and you can now book last minute flights to warmer destinations for just a few hundred Euros. Round-trip flights from Amsterdam to Los Angeles for as low as €333 This means consumers can now visit sunny or snowy places at any time of the year, and will order products out of season as they prepare for their vacations. Retailers should be stocked and prepared with any product a consumer might need, no matter the season. Unseasonable weather Consumer behavior and technology itself aren’t the only things changing seasonality: unseasonable weather can also seriously affect your retail sales. This past summer, Europe was hit by the 2018 European heat wave. The whole continent experienced an uncharacteristically hot summer that began earlier and lasted longer than we could have expected. A recent study found that unseasonably warm weather can cost retailers £40m per week for each degree that the temperature rises, and this was easy to see during the summer. Demand for summer clothes skyrocketed for much longer than retailers expected or were used to. In October, Superdry announced a 49% drop in their shares — part of which they blamed on the hot summer and their inability to sell jackets and coats. Uncooperative weather only underpins the reason retailers need to stay agile in their pricing and marketing. If the temperature soars unexpectedly, the demand for warm-weather clothing, for example, will also rise. The reverse is also true, and if the temperature plummets, consumers will search for more cold-weather clothes and indoor activities like board or video games. How retailers can adjust to the new seasonality There’s no point in trying to fight these changes: the world will only continue to morph and shift in the coming years. That’s why a pricing strategy is so important; it can help you navigate the rocky seas of changing society and new innovations. Pricing strategies are paramount to today’s success. Without one, you’ll get lost in the sea of e-commerce and can quickly veer off-course. But how are retailers supposed to execute any strategy across assortments with hundreds of thousands, if not millions, of products? Pre-internet, the average retailer had to consider around 4,000 pricing decisions per quarter to stay ahead of competitors. This number has now risen to more 60,000,000 daily decisions that you need to make in order to stay competitive. Dynamic pricing makes staying on top of your pricing strategy a possibility, and helps you stay agile in the face of a new seasonality. Omnia’s Dynamic Pricing software helps you manage your pricing strategy across an entire assortment. But what really makes our software different is our advanced tooling, including our weather API. With Omnia, you can combine your strategy with each product’s unique price elasticity...then factor in how its sales respond to changes in the weather. Interested in learning more? Try Omnia free for two weeks and see how Dynamic Pricing helps you take control of your assortment and stay agile in your pricing strategies.

Dynamic Pricing, Pricing Strategies, Shopping Holidays

31.01.2019

3 Ways Retailers Can Prepare For Valentine's Day

It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love, experiences, and gifts. The holiday is changing rapidly though, and if you’re wondering how to change your retail business with it, you’re not alone. How can retailers prepare for Valentine’s Day 2019? This year, the key is to focus heavily on customer experiences — both in your store and offline. In this post, we’ll give you 3 practical tips on how you can prepare for the holiday. Consumer Valentine’s Day trends Many consumers are tired of the over-commercialization of Valentine’s Day. In a 2018 survey, 77% of UK consumers said they thought the holiday was too focused on consumerism. When paired with changing social structures, many consumers feel that the holiday is outdated in some ways. However, that won’t stop consumers from spending. The same survey found that even though consumers felt Valentine’s was an artificial holiday, UK spending for the holiday in 2018 was up 3.2 points compared to 2017. The same was true in the US, and this year alone the National Retail Federation expects Americans to spend over $20 billion on the holiday. 3 ways retailers can get ahead on Valentine’s Day These two opposing forces (changing consumer attitudes but overall increased spending) means there is a lot of opportunity in Valentine’s Day. There is a growing shift toward experiences and personalization in Valentine’s shopping, as well as an overall broadening of the market. So how can retailers get behind these trends? Here are our top 3 tips to get ready for Valentine’s. 1. Think omnichannel experiences As a retailer, this shift toward experiences should trigger “omnichannel” in your mind. Instead of simply selling to consumers, create an experience they can buy into — one that extends beyond their screen and into the real world. One way to create these experiences is to partner with other companies that complement your assortment. If you’re a jewelry retailer, for example, you could partner with a local restaurant to include a complimentary 3-course Valentine’s Day dinner with each purchase. Want to know more about building a better omnichannel strategy? Check out our recent blog to find out how to win at omnichannel retail. 2. Expand beyond romantic gifts It’s true that Valentine’s Day has traditionally been about romance, but this has shifted in recent years. A great example? A 2015 report found that over 21% of Americans planned to buy Valentine’s Day gifts for their pets. And while they were only planning to spend an average of $5 on their animal, that added up to over $700 million in additional sales. There is also the growing trend for women to buy “Galentine’s Day” gifts for friends, and many retailers have noticed an uptick in the number of self-care purchases that people make for themselves for the holiday. Consumers now see Valentine’s as a day to celebrate love of all types, which means you now have multiple audience primed to spend. Embrace this and adjust your marketing and advertising accordingly. The easiest way to manage this is with an intelligent marketing automation software that can follow the market, then adjust your bids on Google Shopping and other channels automatically as opportunities arise. 3. Know which products are popular To properly prepare for Valentine’s Day, you should plan your marketing ahead of time. This means knowing which products are going to be most popular is crucial. Historically, categories like jewelry, flowers, candy, and clothing have performed exceedingly well on the holiday, and these trends are expected to remain stable in 2019. If you haven’t started campaigns yet though, there’s no need to worry. Most people procrastinate on their Valentine’s shopping. As many as 32% of consumers purchase gifts the same week as the holiday, and the number of online searches for Valentine’s-related terms peaks on February 12th! While there is still time to prepare profitable strategies, the small shopping window means that the process of managing prices and marketing will take a heavy toll on your staff. Like on Black Friday, tracking and adjusting your prices manually in the few days before Valentine’s Day is a waste of time. Many teams devote huge amounts of energy to chasing competitor prices, adjusting your own prices, then updating your marketing to reflect this new pricing. When prices change multiple times a day, this becomes a full-time job for many people on your staff. You can use automation software to give your team hours of their time back: time which they can then focus on strategy. A pricing insights software like Pricewatch is the easiest way to get started, and it delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your strategy. Automation can save even more time with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. Final thoughts Whether you want to experiment with a new omnichannel strategy, collaborate with local partners, market your new feline fashion line, or more, use Valentine’s Day as a chance to try something new. However, it’s important to think carefully about what the customer wants, then build tailored, personalized experiences to drive sales. However, none of these creative pursuits are possible if your team is wasting time manually tracking and adjusting your Valentine’s marketing and pricing. That’s why you need automation tools to liberate your team so they build the experiences that consumers are actively seeking. Interested in automation tools? Don’t wait. Get in touch today to set up a free demo of Pricewatch before Valentine’s Day, and see for yourself what’s possible when you aren’t chasing competitor prices. Click the button below to get started.

Marketing, Pricing Strategies, Shopping Holidays

21.11.2018

How to Avoid a Price War on Black Friday

There is growing frustration among shops about Black Friday. This is most notable in the fashion industry, because of a consumer tendency to purchase several items of clothing at a discounted price, try the clothes on at home, then return 14 of the 15 pieces to the store. This phenomenon makes the holiday frustrating for several reasons: It clogs up the distribution network and overwhelms mail rooms around the world It fuels customer frustration when they need to wait for their products because of this pipeline error It falsely inflates retailers’ sales from the day and shows inaccurate stock levels Because of these frustrations, several retailers in the U.K. have chosen to forego the sales holiday this year. And since some evidence suggest that consumer trust in the holiday is declining, it might seem like Black Friday is a passing fad. So why should retailers continue participating in Black Friday? The reality is that the psychological impact of Black Friday on consumers is enormous. One of the most significant benefits of this holiday for retailers is the fact that consumers are primed - and ready - to purchase. McKinsey reported that over 70% of consumers in the U.S., Canada, U.K., and Germany are planning on participating in Black Friday this year. And in the Netherlands, the number of searches for “Black Friday” has increased from roughly 250,000 to almost 1,000,000 in the span of 3 years, according to BlackFridayDeals.nu. Those are high numbers, and shops would be ill-advised to dismiss these consumers who are ready to spend. Instead of avoiding the holiday because of the frustration and lackluster sales, shops should look at how they can optimize their pricing and marketing strategies to capture the increased consumer desire for Black Friday deals. In fact, many of the frustrations that companies voice over the holiday are easy to counteract with a smart pricing strategy. How to make Black Friday work for you If shops should participate in Black Friday, how do they make the holiday work for them? In this section, we’ll detail four steps to take to make the hype around the holiday do the hard work of attracting ready buyers to your website while maximizing your profitability. Build a promotional strategy around your commercial strategy Black Friday is largely a day about price perception. As a result, your promotional strategy for the day should reflect your overall commercial strategy. To get started with this, you should ask yourself two questions: 1. Do I want to do promotions? Depending on your corporate strategy, you might not want to participate as heavily in Black Friday as other organizations might. If your overall commercial strategy is to be seen as a premium store, then you might not want to compete with companies that pride themselves on always having lower prices. Listen: Which categories have the highest price pressure on Black Friday? A great example of this (though not related to Black Friday) is the Dutch department store de Bijenkorf. For many years they had an extremely successful promotional sale called “Drie Dwaze Dagen” (“Three Crazy Days”) - three days of steep discounts across the assortment. However, a few years ago the company changed their corporate strategy. They wanted to cultivate a more prestigious price perception among consumers. So the Bijenkorf got rid of Drie Dwaze Dagen, despite its popularity and success. The lesson: if steep discounts don’t align with your overall commercial strategy, don’t waste time trying to compete with companies that will discount on everything. Instead, you need to be more strategic, which brings us to Question 2. 2. Which assortments will you discount...and by how much? Since Black Friday is all about price perception, you need to be smart about which products you discount. And even though many consumers will participate, many are also questioning whether or not they are actually receiving the best deal. That’s because in many cases, they aren’t. A recent article from the Telegraph pointed out that for nine out of top 10 product categories, there were lower prices on other days of the year. This isn’t because retailers are trying to “rip off” consumers. Instead, it’s because they don’t have the proper data to know whether a product’s price was lower in the last month than what they advertise on Black Friday. Historical pricing data gives you the insights you need to decide which products you’ll discount and by how much. By understanding a product’s fluctuations over the course of three months across your competition, you can see who has offered the lowest price and then use that as a starting point from which to build your discount. This data then allows you to offer consumers some amazing discounts on great products while also optimizing your margins. Leverage the power of price elasticity Price elasticity measures the change in demand of a product with changes in price. Products can either be elastic, where a small change in price will lead to a great change in demand, or inelastic, where a small price change won’t significantly impact demand. The example we like to use at Omnia to illustrate this idea is a TV and a TV wall mount. Televisions are highly elastic products, and a discount on a TV will typically result in increased sales. A small change in price on a wall mount, however, won’t see the demand change. Price elasticity is a powerful tool to use on Black Friday, especially if you combine it with a high-runner strategy, where you discount heavily on a few popular items to draw traffic to your site then price the rest of your assortment regularly. Once you have traffic on your site, you can then cross- and upsell more effectively and drive profitability - all without discounting your entire assortment. Don’t forget about omnichannel experiences Though the vast majority of consumers plan to participate in Black Friday online, shops shouldn’t forget about the omnichannel experience. According to the previously-mentioned McKinsey report, roughly one-third of all consumers across the U.S., Canada, the U.K., and Germany will expect some online retailers to also have in-store offers. Amazon is already capitalizing on this by opening up several “pop up” stores around Europe this holiday season. This is especially true for fashion vendors where consumers prefer to test the product before buying. For example, you might research a pair of running shoes online and know exactly which pair you want to buy, but you’ll make your final purchase in-store after trying the shoe on to find the right size. The increasing influence of the “ROPO Effect” (“Research Online, Purchase Offline”) means retailers need to think about how to measure sales across both channels. Use dynamic pricing Finally, one of the easiest ways to make Black Friday work for you is to use a dynamic pricing software. There are four main reasons shops should consider this investment. Dynamic Pricing helps you: Focus Black Friday on strategy, not on manually chasing and adjusting prices throughout the day. Analyze historical data to evaluate which products you’ll discount and by how much. Track and optimize your online marketing. Reduce the manual labor involved in pricing and marketing. It’s also the best thing to prevent a pricing war to the bottom. Dynamic Pricing allows you to set limits based on your commercial strategy, so your products will never go below a comfortable level. Conclusion Black Friday is a day all about price perception. Shops should use it as an opportunity to reinforce their overall commercial strategy through calculated promotion discounts on key products, not arbitrary price slashes on an entire assortment.