Tips for Black Friday and Cyber Monday Discounting
With Black Friday and Cyber Monday (BFCM) upon us, retailers should be approaching their last-minute discounting strategies differently than in years past. Given the ongoing supply chain challenges and labor shortages, retailers will have to plan carefully to make the most of this high-stakes shopping week.
To meet the moment, retailers should be paying attention to the macro-factors impacting the current retail environment, ever-changing customer preferences (even so much as the final days before BFCM), and the nuances of the company’s own assortment and capabilities.
Consider the current state of play
Black Friday has lost its allure in recent years. Consumers are responding positively to retailers that favor closing physical locations and focusing on ecommerce on Thanksgiving so staff can celebrate at home. Meanwhile, sustainability remains top of mind for many consumers, particularly younger generations, making the mass consumer shopping day not as appealing as it once was.
Additionally, with rising inflation and supply chain bottlenecks resulting in smaller assortments and delayed merchandise, first discounts are at a two-year high. To clear hard-to-move categories and offer fresh styles when they arrive, many products have already received their first discount ahead of BFCM. With all these confounding factors in mind, retailers should reconsider the BFCM strategies of the past, and instead use these traditional promotional days as an opportunity to lean into the desires of their unique customer base, long-standing merchandise, and fulfillment capabilities.
Diversify your discount range
As the perspectives on Black Friday and Cyber Monday shift, discounting strategies will have to change as well. In 2020, the strongest discount bracket was between 50-60% off, where 41% of items were reduced, according to EDITED’s data. After the complications retailers have faced this year including labor shortages and ongoing supply chain disruptions, retailers are looking to protect margins this holiday season. As a result, the most popular discount bracket is currently spread between 30-40% and 60-70% off, representing 28% of discounted products within men’s and women’s apparel.
Know which categories to target
Last year, Black Friday catered to the pandemic-adjusted needs of consumers and retailers. With most people confined to daily Zoom calls from home, clothing tops were the most discounted category and bottoms were the third most-reduced category. Not only was this a strategic choice for mirroring societal trends, but it was also generally the most stocked category, giving retailers more freedom to take reductions with less concern for shortages.
This year, retailers will want to plan their category discounts based on the items they can fulfill despite supply chain concerns. This means slow-moving styles should be advertised as discounted, especially as shoppers buy earlier to ensure fulfilment ahead of the holidays. Additionally, to avoid cluttering the reverse supply chain, products without sizing should be prioritized in the discounting strategy, as this will reduce the need for returns. For example, even though the footwear category makes up between 30%-43% of sellouts, discounts should be avoided in 2021 because complicated sizing could lead to unwanted returns and the price increases affecting sneakers due to demand from factory delays have rendered markdowns ineffective.
Avoid marking down trend-forward items
More than in past years, Black Friday and Cyber Monday are key opportunities to clear older merchandise and slow-moving pieces ahead of the peak Christmas trade and impending arrivals of delayed merchandise. As such, retailers should avoid reducing items with longevity that lend themselves to future trends. This includes preppy pieces like bomber jackets and polo shirts, with collegiate elements poised for continued success in spring 2022.
Seasonal items like Christmas sweaters and other holiday-themed apparel will be hot commodities with the forecasted delays, so these items should also not be marked down. Finally, retailers should consider which fabrics and materials will be harder to replenish and therefore avoid marking down cotton basics or denim, as replenishments will be more expensive due to the supply chain crisis.
Discount products with a seasonal lifespan
Products with a seasonal lifespan, such as sandals, summer shorts and skirts, are optimal for reduction. BFCM is a great time to clear through the remaining summer staples. In the U.S., 65% of shorts and skirts are already discounted.
Out-of-style silhouettes should also be discounted, like skinny jeans and jeggings. The house dress, which has been overtaken by sexy party styles, has also lost its traction in the fashion industry as 97% of smock dresses in the U.S. are on sale. And, even as more consumers return to the office, formal workwear is falling to the wayside as smart-casual clothing gains popularity in the workplace.
Plan based on data-driven research
Despite these recommended tips and overarching trends, discounting will look different for every retailer. Listening to market intelligence is critical for success during Black Friday and Cyber Monday week, and listening to enterprise intelligence is also fruitful. With a clear understanding of what items are selling quickly and which need an additional boost to clear the shelves (online and in-person), retailers can make the most informed decisions about how and when to discount this holiday season.
Kayla Marci is a Market Analyst at EDITED.
