‘It’s ludicrous’: Shoppers ‘sandbagging’ amid unprecedented discounting - online pureplays ambush Black Friday blockbuster in-store event
Wayne Rigney: "Online retailers have gone earlier because they know that shoppers are so keen to get into the Westfields, the shopping centres. Over the next seven to 10 days they will be very busy - that will pull share of wallet away from online."
Online discounting is at all-time highs and shoppers are “sandbagging” as Australian retailers race to mimic their US counterparts in blurring November’s Click Frenzy and Black Friday discounting events into a three week-plus gorge. Live data from circa 4,000 specialty retail stores and online ecom sites across the leisure, home and fashion categories  – accounting for circa $120bn in retail spending - show a mishmash of marketing tactics is ultimately spreading the once short, high-impact sales events in November across most of the month. And the effect? The Retail Score’s founder and former Nielsen US exec, Wayne Rigney, says discounting versus last year is “off the charts” and shopper “sandbagging” is on the rise, where consumers ice purchases and hold out for discounts and the prospect of even bigger discounts. As for how deep retailers have to drop? "This week's going to be the really critical one.”
We’re seeing sandbagging rise - the customer is getting more and more attuned to what Black Friday means for them and their hip pocket
Two weeks ago the veteran retail “syndicated analytics” analyst Wayne Rigney was seeing consolidated sales data from 4,000 retail stores in his Retail Score platform pointing to growth “green shoots” for the first time in 2024 based on year-on-year comparables.
Today that prognosis has reversed as Australian retailers and online pureplays in the past two weeks have caved and gone early with the most aggressive online discounting he’s seen for a long time. Physical stores are line-ball so far on their pricing policies versus 2023 but ecom pureplays and the online shopping sites of omnichannel retailers are charging into steep discounting in a “share of wallet grab” to intercept consumer plans to spend-up during the traditional Black Friday bricks and mortar extravaganza.
“If you look back at this time last year, online retail in the two weeks before Black Friday had an average discount of 19-20 per cent and in physical stores, it was 15 per cent,” Rigney said. “Last week [week commencing 11 November], the average discount in-store was 16 per cent, so marginally higher, but the average discount online was 31 per cent. It’s off the chart. I have not seen that number in quite a while.”
Amazon pressure
Rigney said Amazon was leading the charge in going early and deep in price-off.
“When Amazon’s running 50 per cent off my favourite pair of socks, which they were yesterday [Monday], they’re leading the way. When Amazon goes so do the others," he added.
"David Jones and Myer on their online sites, on Monday, both were mentioning early access Black Friday VIP offers – this is a full two weeks before Black Friday. Certainly for online retailers, they have moved, they've absolutely gone – Black Friday has started," per Rigney.
“What I'm really surprised about is the depth of discounts that occurred last week between online and retail.”
Rigney said there is a two-pronged discounting assault under way in which bricks and mortar retailers are using online as an extra clearance channel and omnichannel and online-only retailers were having to compete.
“That’s why the online retailers will have gone earlier because they know that shoppers are so keen to get into the the Westfields shopping centres. Over the next seven to 10 days they will be very busy – and that will pull share of wallet away from online.
“It's absolutely ludicrous that we've adopted the same approach to the US including the willingness to convert Black Friday into a full two weeks.” And then some – other retail marketers are seeing Black Friday/Cyber Monday now rolling into a full month of heavy discounting and hard ad spend.
One of the effects of this extended November discounting cycle on consumer behaviour was sandbagging,” Rigby said.
“The customer is getting more and more attuned as to what Black Friday means for them and their hip pocket. We’re seeing sandbagging rise – where consumers simply put their hands in their pocket and say, ‘I'll wait for the offer, I'm not going to buy that new that dress. I'll just wait a week. It's going to be 25 per cent off.”
Last 4 weeks year on year % variations data courtesy of The Retail Score. Key: Standalone = physical store | Trnx = number of transactions | ATV = average transaction value | UPT = units per transaction
Rigney said Australian retailers were quickly closing the gap on the US market where competitive jostling is escalating a race to go earlier each year.
“We’re now a week behind the US. Walmart went live with their Black Friday online sale on 11 November. When Walmart announced that around the first or second of November, Target immediately responded by releasing their Black Friday specials. I mean, I've never seen it before,” said Rigney, who spent a decade in the US retail market after selling his retail data business to Nielsen.
Rigney said there remained one positive signal through this year – retailer margins. For the first half, specialty retail stores feeding their sales, pricing and promotion data into The Retail Score saw a 3 per cent increase in average sell price.
“Margin or gross profit percent is actually up about a point across the board,” he said. “There's been price taking – price has gone up across the board and we've certainly seen that in our index. Revenue is still off a bit. Let's see where it lands in November and how December is going play out. How deep do the bricks and mortar retailers go over the next 10 days? This week's going to be the really critical one.”
