The ongoing cost-of-living crisis, rising inflation and debt concerns are all contributing factors for shoppers limiting spend during this year’s shopping event.
Despite a likely overall reduction in Black Friday spend, over three quarters (76%) of shoppers say their proportion of spend online will increase this year as they search for the best deals, range, speed and convenience offered by large-scale marketplaces. Christmas remains a key driver for expenditure with gifting the top reason to purchase for 57% of shoppers.
Tony Preedy, managing director of Fruugo shares his thoughts with ChannelX, on what these changing customer habits mean for retailers over this peak trading season:
When it comes to Black Friday sales, the last few years have seen a stand-off develop between consumers holding out for deals until the end of November, and retailers needing to avoid concentrating all their trading into a very narrow time window. However, with overall Black Friday consumer spend due to fall this year, participating in the event is likely to be ruinous for many retailers. Indeed, indiscriminate use of discounting to drive volume can be detrimental: very few businesses properly calculate the impact on gross margin of reduced prices and the massive growth in units required to keep income stable, never mind growing.
With the cost-of-living crisis shifting consumer habits, retailers need to adapt their strategies accordingly. For example, continued financial concerns will likely cause consumers to spread out their Christmas shopping over a longer period of time to spread the costs, rather than concentrating all of their spending at one time. As the report suggests, shoppers will be increasingly discerning in looking for products via online search, comparing price, availability and delivery times. Therefore, retailers need to focus on optimising their product pages and increasing the visibility of their products.
By listing their products at full price via marketplaces – especially ones that excel in cross-border commerce – retailers can generate incremental sales at full margin that avoids the need to sell those units at a discount in their domestic market. Cross-border-centric marketplaces massively simplify execution of an international growth strategy that will prove to be more profitable than participating in risky sales events.– Tony Preedy, managing director, Fruugo