The leaves are falling, the nights are drawing in, and retailers are starting to display their Christmas ranges. This can only mean one thing, it’s the golden quarter and this year, with Black Friday falling on November 23rd, we are now just 50 days away!
Last year, we saw value growth of 2.5% across Black Friday week when compared with 2016. Volume was down 7.4% reflecting a higher price mix. The better sales increases actually came the week before, with value growth at 10.3% and volume also up 2.1%. The big story however, was online tipping the balance at 53% of sales in the weekly data.
(Read the 2017 Black Friday review here: https://www.linkedin.com/pulse/black-friday-week-store-sales-now-minority-gfk-pos-mclaughlin/)
So what are the key factors likely to have a bearing on this event and what should we expect in 2018?
Latest results from the GfK Consumer Confidence Index for September show an overall 2 point drop to -9. The uncertainty around Brexit is an ongoing concern for consumers and businesses alike, and with less than 6 months until we “leave” the EU there is no clear direction.
It’s however encouraging to see the major purchase index has remained the same month on month at +6. Personal financial situation decreased 3 points versus August but is still higher than this time last year. So although the headline index has fallen, there are glimmers of hope within the data. The inference here is consumers are more open to and likely to engage with promotional events. This has the potential to shift even more spend into the Black Friday period and away from December. With the Black Friday sales event spanning an ever increasing chunk of November, it’s important to maximize the opportunity as retailers can no longer rely on December to make the year.
The annual GfK Futurebuy study reports price as the number 1 driver when shopping online, and the 5th most important when shopping in store (seeing products before purchasing is number 1 offline). A third of respondents say they are comparing prices more now than in the past. Searching for the best price is in fact the top online shopping activity, and not surprisingly 30% of consumers use their mobile phone to compare prices when out shopping. There’s also a feelgood factor when consumers believe they’ve got a good deal; our Consumer Life study reports that 74% of us agree with the statement “I feel really satisfied with myself, even excited, when I get a really good deal”.
So we know consumers will quickly compare prices and find the best deal across the online market, a market that now takes at least 53% of value in Black Friday week! Put simply, if you can compete on price, you can take share. It goes without saying that timely pricing intelligence is key across Black Friday trading to ensure ranges are competitive in an ever changing market. Last year our Online Pricing Intelligence monitored a quarter of a million price movements in Black Friday week alone, with the highest number taking place the Monday before Black Friday itself. Reviewing the laptop category as an example, two thirds of the product range in the market saw a price drop during the month of November 17, with an average decrease of 9.4%.
Our Futurebuy study observes 62% of respondents agreeing to “I am now less loyal to any one brand as I need to shop around more to find the best value”, and almost the same number confirming “I am now less loyal to any one retailer, because I have to shop around more to find the best value”. This could be seen as a threat, but it should be taken as an opportunity. Consumers will consider brands and retailers they have not engaged with before if they perceive the value to be there. Retailers and brands alike therefore have the opportunity to pick up a raft of new customers over the Black Friday period. Retaining (some of) these afterwards is another topic, but for today we focus on the Black Friday opportunity.
Our Demand Forecast Overview uses our unique POS data assets to monitor historical performance and predict future trends. Forecast information can be reached at category level. For the technical categories overall, we predict a small quarterly year on year value growth of 0.7%. This is driven by online growing 2.2% whilst traditional sales decline marginally. Looking at a couple of categories, our prediction for TV sales in Q4 is flat overall in value when compared with the same quarter last year. This is driven by circa 4% growth online whilst stores again decline in this category. Moving to a different sector, our projection for washing machines is 4% growth in value, driven by 6% gains online and 2% offline. We predict slight volume growth in this category, but most of the value will come from a 3.5% increase in average selling price.
In summary, it will as always be an interesting end to the year. Against a mixed economic backdrop, we predict a slight growth this next quarter. Which categories, brands and retailers benefit from this is yet to be seen, and will be determined by a complex range of factors. The range of Business Intelligence Solutions available from GfK are there to support our partners and clients in navigating these complex and competitive markets. Please contact myself or your Account Manager for more details on any of our solutions.
Data from GfK Weekly POS Leader Panel, Consumer Confidence, Futurebuy, Consumer Life, Online Pricing Intelligence and Demand Forecast Overview
Technical categories defined as Consumer Electronics, Photo, Information Technology, Printing Hardware, Telecoms, Major Domestic Appliances and Small Domestic Appliances