Boxing Day no longer supreme

Australians have long dismissed the Black Friday sales as being just another American fad.

Falling on the day after the US holiday of Thanksgiving, having earned its name in the American city of Philadelphia, and with half that country’s states marking the day a public holiday, this was an understandable line for Aussies to take.

However, this year - for the first time in their history, one of our clients has totally embraced this major sales event, as the enormous surge in their search traffic year-on-year for the month of November 2020 made it impossible to ignore Black Friday.

Because, while you can rail against it like a Boomer complaining about the Americanisation of Halloween and trick or treat-ing – Black Friday may be a US creation, but it is here to stay.

Even if retailers may prefer that it wasn’t.

For the vast majority of Australia’s retail history, the biggest sales event of the year was Boxing Day.

And that was because it worked perfectly for the retailer, as they would sell their big-ticket items at full price in the lead-up to Christmas. Then, having made their fat December margins, Boxing Day was the perfect opportunity to get rid of excess stock by slashing prices.

Black Friday turns that on its head, with this massive sales event being held approximately a month before Christmas, which means consumers have the opportunity to do their Christmas shopping at considerably reduced prices.

Obviously, this affects holiday-season margins, which means that retailers would prefer to just ignore this American event – which had long been an option.

Consumer awareness and expectations have soared

As recently as 2017, Black Friday just wasn’t a thing in Australia, with McCrindle Research finding “less than 1 in 20 Australians (4.7%) are expecting sales, and more than 1 in 4 (27%) have never even heard of it.”

But in the few short years since, this has been turned on its head, to the point that Black Friday is now the biggest sales event on the Aussie calendar, with Aussies expected to spend $5.4 billion over the four days from Black Friday through to Cyber Monday in 2021 – well outstripping last Boxing Day’s estimated $2.75 billion.

The effect on Christmas shopping is set to be cemented in Australia this year, one of the many unexpected knock-on effects of Covid-19. As trust in Australia Post has dropped, Google Tends says, “almost 1 in 3 Aussies recently expressing their concerns over delivery dates and items not arriving on time”.

Falling almost a month to the day before Christmas, Black Friday is perfectly positioned to take advantage of this loss of trust, with ‘last minute’ Christmas shoppers falling by 23%, meaning far more Australians are set to discover they can buy their presents in the sales, save big, and still have the peace of mind that their orders will arrive before December 25.

All of which means Aussie retailers can no longer just ignore the Black Friday weekend. You either embrace the event, mark down your prices and see an uptick in sales – even if the increase doesn’t necessarily lead to healthier margins – or you simply get wiped out.

In the space of five years, Aussie consumers haven’t just become aware of the Black Friday sales – they expect them. And what’s more, they are planning for them.

Aussies now researching in preparation

In the build-up to Black Friday last year, we saw searches increase by 120% and there was an expectation that the same trend would be seen on the day itself. However, the opposite happened and searches dropped, while revenue increased by 83%.

Driving that decline in searches and increase in revenue was the substantial growth in research being done.

Consumers expect that there will be offers available on the day, so they find the best offers in the days leading up to the event to ensure they can purchase immediately while the product is in stock, with confidence they have got themselves the best deal, leading to a peak purchasing time of 9am on the Friday.

This has brought about a complete decimation of brand loyalty, with Google Trends showing that 71% of consumers were willing to purchase from a retailer they had never bought from before in the sales.

In short, it’s a race to the bottom – you either have the lowest price or everyone bar your most loyal customers will simply get what they want somewhere else.

So not only do you need to embrace Black Friday if you want to have any significant turnover in the month of November, you also need to be part of the sales or you risk seeing your customers go with a competitor and, potentially, decide not to return.

The cost, therefore, of embracing Black Friday may be that you see smaller margins in the lead-up to Christmas. But the cost of not being part of the sales is shrinking your customer base, which is a far more expensive proposition in the long-term.

On the flipside, you can also damage margin if you fall into the trap of simply making the whole of November a sales month, flooding the lead-up weeks with offers.

How retailers and brands can take advantage

While many retailers start reducing prices in the weeks prior to Black Friday, hoping to take advantage of the increased search traffic they’re seeing, consumers still want to see a deeper cut over the actual weekend.

That means if you give the full discount in the lead-up to the event, the perception will be that you haven’t given any discount on the day, seeing many customers take their business elsewhere.

The key is to find the middle ground.

Using the information from last year we are advising clients on the smartest way to approach both the build-up and the event itself – specifically by using a teaser offer, combined with owned communications around the upcoming deals.

This keeps the consumer informed that there will be something bigger coming up, while also taking advantage of their research phase to generate some revenue as well.

The result will be sales that come about from the increased search traffic, before having a major turnover weekend on Black Friday through Cyber Monday, as customers come back to discover and take advantage of your ‘real’ offer.

Just as ignoring it could see you lose a large chunk of regular customers, by having a strategy to maximise the interest generated by Black Friday, you could create a whole new customer base