From Singles Day to Cyber Weekend and everything in between, it seems as if the last few weeks of the year have turned into a blur of never-ending discounts and deals. But with so many sales events in the game, what is it doing to the consumer mindset? Is it telling shoppers not to value a sale?
Everywhere you look, there’s another sale. What started out as Boxing Day and End of Season sales has turned into a mixed bag of online and offline events. Five years ago, Click Frenzy was the biggest online sales event. In fact, it was the sale that stopped a nation. As the clear leader of the online event season, it took a few years for other events like Black Friday and Cyber Monday to make themselves stand out in the landscape.
We’ve been seeing more sales events popping up everywhere. Sure, who doesn’t love a bargain? Sure, it’s great for added exposure for a brand. But it surely has negative side effects, too. And retailers are starting to see the impact.
We’ve seen exponential growth in e-commerce sales in the last 18 months. It’s been well-documented that more than five years of growth have been accelerated in the last two years, driven mainly by the pandemic. In 2020, there were one million new shoppers jumping on the e-commerce train – this is roughly 73 percent of Australian households using online retail as a shopping channel.
But that’s a good thing, right?
Data from Power Retail’s Trajectory Report suggests that sales event spend is on the rise. The average spend is $505 for 2021, compared to $347 in September 2019. With 76 percent of respondents saying that they wait for online sales events to make purchases, we can safely say that sales events are still doing their job.
Let’s break it down a bit further. The Trajectory Report also shows that shoppers are saving their spending for certain events in the year. The majority of online shoppers (51 percent) have participated in an online shopping event, with 63 percent saving their money for Click Frenzy, and 34 percent prioritising Black Friday and Cyber Monday.
But what can happen if we keep adding more sales events during the year? We spoke to Tobey Bower, the Commercial Director at Alpha Digital, who explained industry reports show that spending during events like Black Friday is lower than usual. “Anecdotally, we’ve seen that for big retailers, revenue numbers were similar year-on-year. Yet Shopify has measured platform revenue up, so perhaps the growth has come from smaller retailers this year,” he told Power Retail.
“From the data we’ve seen, consumer purchase behaviour definitely ramped up earlier this year, with almost three-quarters of the total sales volume taking place in the five days leading up to Black Friday itself.”
He further explained that through a combination of factors, consumers have become reliant on the sales event to be there, even if they miss out on the day of the event. “Between Singles Day, Prime Day, Cyber Week, all the Click Frenzy calendars dates throughout the year, as well as season-based sales, the traditional peaks we’ve seen are continuing to flatten out and shift to an almost always-on mentality,” he said.
So, have we started to blunt the effect of sales events? If more events pop up throughout the year, what would it mean for the mentality of shoppers moving forward? According to Power Retail research, the average discount shoppers expect during a sales event is at least 32 percent off RRP – this will drive them to purchase immediately. And that’s at every sales event.
Discounts are inherently an important part of the retail strategy, but it’s important to remember that overusing them can do damage to a retailer’s brand. All in all, it’s about balance. Retailers need to figure out a better approach to retaining customers other than using discounts and creating new sales events.
There are plenty of ways retailers can do this, too. A loyalty program, an exceptional customer experience, and even just a faster loading site – these can all influence purchase decisions without having to add an extra red slash to the price tag.
So, in 2022, can we collectively stop adding more sales events to the retail calendar? It may be doing more harm than good.
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