With the biggest shopping season of the year behind us, let’s delve into the key themes that defined Cyber Weekend. In October, we explored key shifts shaping consumer behavior and highlighted tactics that would set brands up for success in November.
The Headlines
- At $10.7b, Cyber Monday 2021 underperformed by $100m compared to the record set last year (AdWeek)
- Black Friday in-store shopping was down 28% vs. pre-pandemic levels (Sensormatic Solutions)
- Cyber Monday sales dip for the first time ever (Adobe Analytics)
- Thanksgiving Day sales were flat YoY (Adobe Analytics)
Let’s delve deeper into the pivotal themes that defined the season to glean the full picture behind a seemingly uninspiring bottom-line performance.
No Such Thing as “New Normal”
When everything is in flux for as prolonged a period as we are experiencing, “normalcy” is no longer applicable, nor expected; this holiday shopping season was no different as consumers essentially responded to trends set by brands.
Zooming Out
In 2020, the end-of-year surge in COVID led to store closures and reduced store capacity over Black Friday. As a result, consumer behavior quickly shifted in favor of digital and accelerated the long-brewing ascent of digital. eCommerce spend shattered US records, hitting $10.8b.
Retailers Rework the Playbook, Shoppers Listen
A perfect storm of supply chain woes, labor shortages, and spiking cost of raw material put brands on red alert as Q4 approached, sparking action to ensure inventory issues wouldn’t impact EOY revenue targets.
Meanwhile, early signs of inventory shortages, coupled with reduced concern of COVID transmission increased overall consumer desire to shop in-person.
In the US, the return to brick & mortar was regionally nuanced, shaped by the degree of concern about COVID – the South hitting traffic levels closest to 2019, followed by the Midwest, and the Northeast trailing by a margin.
Savvy retailers, led by a pattern affixed by Amazon, Walmart, and Target, launched holiday campaigns and discount messaging as early as October. In addition, major retailers (including Target, Best Buy, and Walmart) kept doors closed on Thanksgiving day, in effect reshaping the entire shopping calendar.
Though more than half of retailers’ website transactions were desktop conversions, overall traffic skewed mobile (62%), reaffirming that most consumers still prefer browsing and discovery on mobile, but purchasing on desktop. Notably, comfort with mobile-only shopping is steadily increasing.
The numbers add up – consumers had already spent $99b+ before the end of November, a 14% YoY lift and a whopping 48% vs. 2019, incrementally rising by day (10% as of the first 3 weeks).
Another trend we identified this year was the reduction of promotions. On average, amongst the mid-range luxury fashion retailer subset, less than 3 in 10 had markdowns this quarter, about half compared to last year. The perfect storm of macro factors passed the cost down to the consumer, upping final price points in-cart +14% vs. last year. Meanwhile, buy-now-pay-later services were in hot demand, registering a 21% YoY revenue lift.
All in, forecasts are strong – the NRF, Bain, Deloitte, and McKinsey all forecast Q4 closing at a peak compared to last year, as brands reimagine their approach to holiday promotions. Tourism continues to rebound with global vaccination access on the rise, and social commerce hitting fever pitch, the discretionary, travel, and entertainment verticals are predicted to perform particularly well.
Wunderkind clients were positioned for success – and it paid off
The Highlights
Data for the week of 11.24.21- 11.30.21
Looking Ahead
1. The increasingly mobile-first consumer journey is doubly true for the most valuable cohort – 76% of loyalty members note SMS as their preferred channel of communication with brands. Thoughtful integration of text into a holistic, segment-tailored strategy is imperative to bolster retention, loyalizing newly recruited markdown customers.
2. Segmenting consumers into behavioral cohorts, rather than the traditional common demographics or wallet share-bucketed groups, will unlock value. Tailor personalized experiences in a channel and device-agnostic world to establish a foundation for longevity. McKinsey notes behavioral segmentation driving up to 20% higher acquisition, 15% LTV, and 30% NPS.
3. This year, loyalty was on the table. Of the 60% of consumers who faced stockouts, only 13% waited for items to return to stock, 70% opting to switch brands instead. Retention is trickier than ever and tapping into cross-device engagement by recognizing a customer’s holistic journey is critical to ensure you’re meeting them where they are. Measurement of success based on loyalty and engagement is paramount, with highly-engaged consumers spending 25% more than their brand-aware but inactive counterparts.
Though Cyber Weekend is behind us, retailers continue to leverage this expanded markdown calendar so there is still an opportunity to be seized for the remainder of Q4, and certainly to meaningfully craft your strategy for another uncertain year. Please reach out and request a demo if you’re interested in discussing how your organization can be set up for success across channels.