International Trading and Insights around Black Friday 2020

Reflections on the most anticipated peak trade period ever!

With the Covid-19 pandemic impact felt throughout most of 2020, non-essential retail has been impacted particularly hard by the rolling lockdowns, especially by those dependent on bricks and mortar stores to meet consumer demand.  It has been a year of temporary and permanent store closures, compounded by a raft of voluntary administration processes across high profile and smaller brands alike, driving significant redundancies across the board.  Equally challenges in gaining and maintaining the right stock supplies whilst consumer shopping behaviours and preferences have materially changed in parallel has added to the pressure on the whole industry.

It is no wonder that everyone in the retail industry has been looking to the traditional peak online trading period around Black Friday this year as a barometer of consumer confidence and of shopping appetite to enable stores to turn stock, grow revenues and boost cash flow more than ever before.

We all hoped for and expected a strong rebound in sales as the holidays approached, but this year’s trading peak is proving to be an outstanding period for those effectively trading online through their digital commerce systems. We have compared and contrasted the aggregate and anonymised performance across our client base for the full month of trading in November 2019 to that of November 2020 and also contrasted the experience in the UK and Ireland (UKI) to that of Australia and New Zealand (ANZ).

In terms of headline, we have seen an average Year on Year (YoY) growth in revenues for our clients across all sectors of an astonishing 129% in UKI and 53% in ANZ, with growth for some clients recorded up almost 300% YoY.

When comparing the performance by market, it should be noted that for the majority of November 2020, the UK was in a full national lockdown, forcing non-essential retail stores to close their doors and driving traffic and trade online.  Many retailers also adapted from the experience of the initial lockdown in March and April to better leverage store stock and enable new capabilities such as curbside pickup / fulfilment from store in order to provide maximum capacity and opportunity for sales online in this seasonal shopping period.

Whilst some product categories have been hit hard by the lifestyle changes imposed on us this year (e.g. through restricting travel and changing the nature of how we work), those supplying products in sectors that remained in-demand through the year have seen sales online soar, enabled through scalable digital commerce capability and their operational agility to adapt to the changing trading conditions.

We asked our talented Client Success team to review how online trading performance faired in each region.  The following is a high-level summary of our key takeaways from November trading:

  1. Peak started sooner and ran longer: Peak trading was no longer just about the Black Friday – Cyber Monday period (BFCM) as many started their messaging and promotions a lot sooner to encourage shopping earlier and reduce the risk of creating acute stress on their operations during the typical peak weekend when high demand was expected. Campaigns ran longer and peak activity took a different shape in each region.
    • Many ANZ retailers maintained promotions throughout the month from the Click Frenzy event in early November through to post Cyber weekend.  Online transactions increased 45% on average YoY for the month.
    • In the UK the national lockdown drove traffic online early and many retailers capitalised on that increased traffic to secure sales earlier and sustain the promotional calendar though the month. The average increase of transactions for clients in the month of November was 155% YoY, with some exceptions rising to 300% and beyond.
  2. Promotional behaviour changed: Generally, promotions were more constant over the peak period and less aggressive YoY, rather than varying day by day and with the deepest offer at Black Friday weekend as had been seen in previous years.  Variances in discount rates marketed were implemented at category level by some.
  3. Online Traffic was materially up: Without doubt, more people than ever are active online and whilst that doesn’t necessarily translate to more customers for a specific brand, it presents the most significant opportunity to reach, engage and service new customer groups. Globally we saw overall traffic up 31% year on year in November.  The UK traffic was up almost 100% with non-essential retail stores closed and a more modest average in Australia with growth on average in the mid-teens but where stores were fully open.
  4. Online conversion jumped up: As important as the growth in visitors to storefronts was ensuring that the quality of traffic during this period was good and the digital commerce platforms could engage them well. Whilst the bulk of clients attracted a lot more traffic YoY, even those that had modest traffic changes in visitor levels still converted many more visitors into successful shoppers with mean conversion rates up around 30% YoY, and highest conversion performers up over 100% YoY.
  5. The technology scaled-up and delivered: The digital commerce platforms performed really well, having been tested, optimised and configured pre peak, delivering 100% uptime and a positive customer shopping experience throughout the extended and crucial peak trading period. The proactive support of our LiveOps team working around the clock to monitor, triage and remediate any technical issues and communicate performance updates continued its excellent track record.  Whilst ready for any event that may occur, the reality was that activity was more about support for clients on monitoring feeds and content changes and aiding the set-up of promotions / configurations so that trading was optimised and operational issues were avoided or mitigated.
  6. Post checkout operations came under greater pressure:  The scale of orders growth for some retailers was far higher than they had expected, requiring more agility in the management and adaption of promotions.  For some this led to some bottlenecks in post transaction fulfilment through the pick, pack and shipping activity, especially with the postal and courier networks under intense load.  This in turn can give rise to longer customer service activity peaks whilst delivery congestion through to the customers was eased.
  7. Stock / Supply chains pre peak impacted planning:  With international supply chains still recovering post the adoption to the covid impact, the nature of promotions through peak for some retailers had to adapt due to stock availability and required changes in merchandising and promotional activity to maximise stock turnover and protect margins.

So, in summary, the peak month of November saw heightened traffic, improved conversion and record online sales for most. It was certainly a bumper year for those that were digitally enabled, informed, agile and optimised.  The biggest challenges our clients faced in ‘peak 2020’ have not been technical or digital commerce platform related, as these systems (and the pre-peak preparation and LiveOps support) worked really well. However, the sheer level of growth of demand online did create pressure for some on scaling physical order fulfilment operations, ranging from the availability of stock to meet consumer demand, through to the delivery bottleneck, and the subsequent knock-on impact to customer service enquiries whilst the congestion eased.

Whilst these operational challenges can be seen as ‘good problems’ to have when viewed through the lens of significant demand growth, some retailers also managed their promotion activity so as to optimise their back-end operational capability. The preparations by many to opt for a longer peak trade season, especially in the UK where stores were closed, had the added benefit of spreading the load of orders out over a few weeks, relieving pressure on these systems and resulting in happier customers in the long run.

Looking forward

2020 peak trading online has been a bumper period for those with the systems, teams and agility to capitalise on the opportunity of increased shoppers active across digital channels.

This year is likely to prove to be pivotal in redefining those businesses that adapt and prosper and those that lag and struggle.  We have seen only too clearly of late that the size and age of a retailer is not any protection against what a pandemic can throw at it. A retailer or a brand must be relevant, agile, responsive and absolutely has to be digitally enabled.

The market, and indeed customer, requirements may be changing, but in change there is also significant opportunity – a chance to adapt and adopt business practices to provide agility and capability for long-term success.  The growth in consumers who have had to adjust to online shopping will not dissipate, they will continue to shop online long after the pandemic has passed, and more important, their expectations of retailers has become greater. They will of course return to physical stores as and when they are able, but they have seen the 24/7 convenience, they have searched and shopped online, engaged in social, downloaded apps and gained new skills and experience in the process. Recognising and meeting your customers where they are active and presenting an intuitive and engaging experience across all relevant channels is the new normal.

Long gone are the days that Digital Commerce was just another channel – today it is a business continuity plan and the critical enabler of scalable and sustainable growth.

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