It may be only June but for retailers Christmas is never far from their minds. From a marketing perspective, the holiday has always had the air of being forever suspended in a jolly, commercial snow globe, complete with happy family celebrations and flurries of cash swirling and falling into the tills. And it remains a mass selling opportunity, with the power to make or break companies in markets around the world.
Opportunities seem only to be growing. The “Christmas creep” phenomenon has meant the commercial activity around the festive season starts earlier and has gradually extended, with the Boxing Day sales now stretching into “Boxing Week”. December on the whole still returns such a huge sales increase that it puts other shopping periods in the shade.
Merchants piggyback on the holiday even in countries that don’t have a significant Christian heritage. Christmas is a thriving concept in most major cities in China, for example. It is not a public holiday, but young people exchange gifts and apples, because the Chinese word for apple, pingguo, sounds similar to the phrase for Christmas Eve, ping an ye. However, the holiday’s proximity to the world’s largest shopping festival, Singles Day (also known as Double 11), on 11 November, means Christmas is largely leveraged using offine promotions, such as at restaurants and shopping malls, Xiaofeng Wang, a senior analyst at Forrester in Asia, says.
Retail sales in the US for 2018 totalled $506bn (source: Business Insider)
|2. Chinese New Year
|Retail and food and drink industry sales for 2019 were $149bn (¥1tn), a year-on-year rise of 9% (source: Nikkei)
|3. Singles Day
Overall sales for 2018 reached $31bn (¥214bn), up 27% year on year (source: SCMP)
|4. Mother's Day UK
Spending in 2018 was £1.6bn ($2bn) (source: Drapers)
|5. Valentine's Day
Overall spending in the US for 2018 was $19.6bn (source: NRF)
|Spending in the US for 2018 was $9bn (source: The Balance)
|7. Cyber Monday
Online spending in the US in 2018 reached $7.9bn, up 19% year on year (source: Adobe Analytics)
|8. Black Friday
Online spending in the US in 2018 was $6.2bn, up 24% year on year (source: Adobe Analytics)
|9. Amazon Prime Day
Sales in 2018 were estimated to be $4.2bn (Source: analyst estimates)
Online spending in the US in 2018 was $3.7bn, up 28% year on year (source: Adobe Analytics)
(The above information is based on publicly available sales data and is not all global or strictly comparable. In terms of scale, however, it gives a fairly accurate picture of the leading global events in an order that is likely to be broadly correct)
But a look at the latest statistics reveals a less glowing Christmas picture. For Christmas 2018 there was no year-on-year growth for sales in the UK, according to the British Retail Consortium’s like-for-like Retail Sales Index. In the US, despite predictions that Christmas sales would pass $1tn for the first time last year, February figures from the US Department of Commerce showed a December sales decline of 1.2%, the biggest drop since 2009. Sales at non-store retailers (which include online shops) also plummeted 3.9%, more than they had since 2008. In the UK, brands from Superdry to Sainsbury’s reported a fall in spending.
Granted, Christmas spending can be fickle. “While there’s always a date in the diary for these events, the key is to read when and how the nation wants to engage with them,” Simon Gregory, group strategy director and partner at Bartle Bogle Hegarty London, points out. His client Tesco managed to buck the trend last year to deliver its best Christmas week since 2009. He adds that 2017 also “brought a surprise at Christmas – in a year of financial worries and low customer confidence, the UK threw caution to the wind and thought: ‘Screw it – I’m going to do Christmas properly this year’”.
Various factors may have contributed to a tepid 2018 Christmas, from the US government shutdown
in December and January to the general climate of economic uncertainty. But also at play is the fact that Christmas now has serious competition. Amazon Prime Day in mid-July reportedly broke the retailer’s own sales records in 2018, despite some major website glitches. Other holidays are growing as retail opportunities around the world (see below. But a greater focus on Black Friday promotions is cited across the board as an explanation for Christmas revenues’ lack of fizz.
In the US, the term "Black Friday" started to be used to describe the day after Thanksgiving in the early 1950s, and its retail connotations gradually gathered steam from there. US retail expert Jan Kniffen recalls shops holding 10am-10pm Black Friday shopping days during the early 1980s. These hours were slowly extended, and Macy’s was the first US store Kniffen remembers opening at midnight after Thanksgiving Day, in 2011. The way was cleared for 24-hour shopping bonanzas, with retailers taking advantage of the Thanksgiving holiday to lure customers with deals and discounts.
Black Friday has since spread around the world, influencing marketing strategy in countries as diverse as Australia, Norway, Brazil and Mexico (where the period is known as El Buen Fin – The Good Weekend). Asda launched a “Walmart’s Black Friday by Asda” campaign in the UK in 2013, prompting many more British retailers to start their own events the following year.
Customers have responded well. McKinsey’s Black Friday 2018 Shopping report found that 71% of British and German consumers described themselves as “excited” or “happy” to participate in Black Friday shopping in 2018. By comparison, in North America, 69% of Americans and 66% of Canadians said the same. The most cited motivation for participation in Black Friday in those four markets was “steep discounts”, the survey found, followed by “one-off promotions”.
The day has, in just a few years, so permeated the consciousness of both shoppers and marketers that “it feels like we’ve always had it”, according to James Murphy, co-founder of Adam & Eve/DDB, who is in the process of launching a new agency.
But it’s also true that Black Friday’s culture of mega-discounts means people may be less willing to spend at Christmas, he says. “[At Christmas], volume is hugely important but value is also really important, so customers come to market with much less price sensitivity than at other times of the year,” Murphy explains. “Black Friday has effectively dynamited that right at the beginning of the season.”
Linked to Black Friday now are several other shopping events in the same weekend, each with their own niche – and giant sales potential. Cyber Monday, so named because of the surge in online shopping after the Thanksgiving weekend, actually raked in more in online sales in the US – $7.9bn compared with $6.2bn – than Black Friday last year. Small Business Saturday also brought record levels of spending in the US.
Over the whole five-day holiday in 2018 165 million Americans – more than half the population – went shopping, according to the National Retail Federation, spending an average of $313.29. More and more did so online, the figures show, with the knock-on effect being more bricks- and-mortar store closures and bankruptcies. JP Morgan equity research analyst Matthew Boss told CNBC in November that there had been more of these in the past two years in the US than in the past ve years combined. In the UK, footfall on high streets in November was down by 3.2% year on year, reaching the lowest levels since the recession, as shoppers went online instead.
For marketers, navigating these shifting trends is a big challenge. Discount shopping days such as Black Friday are “fundamentally different” from the traditional holiday shopping seasons, Jonathan Cummings, Greater China chairman at the retail consultancy Fitch, says, because they are driven primarily by buying for oneself rather than purchasing gifts. He has started to see more “gamification” around online shopping as brands attempt to boost engagement and activity amid the competition, which can feel like little more than a race to the bottom.
Murphy says the main aim of marketing and retailers should be to make sure they are “visible and present” amid all the chaos. “Everybody is now trying to be clever to reach out to the customer and get their attention,” Kniffen adds. “It’s a sea of noise out there, unless you can be loud, price-driven or clever. You have to be at least one of those things.”
Gregory sounds a word of warning around the culture of discounts in events such as Black Friday, however, saying brands are becoming “increasingly cautious” of them. “After all, there are only so many electric toothbrushes you can buy in a year.”
He adds: “My view is that customers aren’t really bothered with the concept of branded shopping events, but if it’s a chance to get some great deals or find some good value, then great. As markets fragment across channels, and with an ever-growing list of new offerings, customers almost expect to get a good price on whatever they’re after.”
Marketing insights such as these can seem irrelevant, however, for the brands playing in the Chinese counterpart to Black Friday, an event now so huge it hardly bears comparison.
China’s Singles Day shopping bonanza gets its name from the date, 11 November, which was chosen by students at Nanjing University in east China as a day to celebrate being single. The solitary numbers in “11.11” fit well with their unattached status and resonate with a Chinese expression for a single person, which translates to “bare branches”.
A decade ago, the Chinese conglomerate Alibaba Group decided to “ride on the bus”, as chief marketing officer Chris Tung puts it, creating a buzz around this 24-hour period as a good time to shop across its Taobao, Tmall and Lazada marketplaces. “Kill your time, kill your loneliness,” he says.
Now a long way from its roots, 11.11, also known as Double 11, has soared in popularity with all kinds of consumers. About 180,000 global brands participated last year, pulling in a record gross merchandise value of $30.8bn and exceeding the previous year’s totals by about 20%.
Virtually all the numbers around Singles Day are mind-boggling. That first $1bn in merchandise value last year was achieved in just 85 seconds; $10bn was reached in little over an hour. Alibaba’s logistics subsidiary, Cainiao Network, processed more than one billion delivery orders (up 23% on 2017) in 2018; compare this with Amazon’s latest Prime Day, which reportedly shifted 100 million products.
The Alibaba Carnival
The 'festival' element of Alibaba's Double 11 Global Shopping Festival is not simply an empty word. It reflects the company’s vision to turn what started as a 24-hour event into a giant, 20-day carnival of shopping. This is a response, according to chief marketing officer Chris Tung, to consumer feedback about how much people look forward to the day.
“Shopping is fun, so we are combining shopping with a lot of entertainment initiatives,” Tung says. The world’s largest “See now, buy now” catwalk fashion show takes place a couple of weeks before the day, for example, showcasing new products that can be bought on the spot via mobile apps and online.
Miranda Kerr at the 11.11 gala in 2018
Then, the 11.11 Countdown Gala Celebration ramps up the anticipation a few hours before the sales start with an all-singing, all-dancing TV show populated with celebrities (model Miranda Kerr and singer Mariah Carey starred in 2018, Kerr having launched her new skincare line on Alibaba’s Tmall earlier in the year); performances (Cirque du Soleil gave a shopping-themed act in 2018); and a range of interactions to engage those watching on their phones or online.
These and many other activities from parades to parties combine to involve “almost everybody in the Alibaba Group” – more than 65,000 people, according to the company’s 2018 statistics – from ecommerce to the cloud teams, with Singles Day, Tung says. “We joke that this is a super team-building [project].”
Beyond the figures, the nature of how brands participate in Singles Day has also put significant space between this and events such as Black Friday or Boxing Day sales. “Your experience for Boxing Day is: you have to see if you have the luck to get the right colour, the right size. This is about liquidation, this is about picking up the leftovers with luck,” Tung explains. Singles Day, he adds, is “totally different”.
“You have the trust that the best brands are launching the newest models on this day,” he says.
Apple launched its iPhone XR on Singles Day, for instance, while Nike released two exclusive Air Jordan 4 trainers and Adidas put out a limited-edition line of its UltraBoost shoes. Brand planning for 11.11 begins about six months before the event, Tung says, with some starting it a full year in advance because of the day’s expected impact on procurement and inventory. Two months or so ahead of time, Alibaba will share guidelines on the newest tools and initiatives available to marketers.
Recent innovations include games and augmented reality tools, Wang explains. In 2017, for example, a new game on Taobao called “Catch the Cat” helped drive offline traffic by encouraging mobile users to click on a virtual cat while shopping to unlock perks in selected bricks-and-mortar shops. Other AR use cases launched on Singles Day include online and offline virtual make-up testing, where consumers can “try on” lipsticks and eye shadows to see which colour looks best.
Alibaba itself also likes to experiment with new technologies on the day. It now has AI-powered
chatbots to engage with consumers, track their order status and provide recommendations based on AUG browsing history, for instance. This data is then fed back to brands for future use, Tung explains.
“Of course 11.11 is the largest day, but that day is not just the Singles Day sale because we have databanks to help [brands] to capture all the potential leads that have viewed their site, or viewed their app, so with that data bank they will have a tool to help them retarget their potential customers after the date throughout the year,” he says. “That’s a big payout of all the investment they put in for the day.”
So broad is its scope and purpose that Alibaba is now trying to distance itself from the name Singles Day. Four years ago it renamed the event the Double 11 Global Shopping Festival to reflect its ambitions to spread out to the world. Outside China, the majority of transactions on 11.11 still come from Asia, but shoppers from more than 200 countries participated in the latest event and 40% of shopping was from international brands.
Many pundits noted that even though it maintained significant growth in 2018, the speed of 11.11’s expansion is slowing. Alibaba has reasons to be confident, however. “It wouldn’t be surprising to cross the $100bn per day milestone in years to come, given the momentum we have,” Tung says. “The main reason we have faith in making this really a scalable activity is mainly because we have got more and more support from the brands.”
Challenges may, perhaps, come from other festivals around the region that are trying to copy the Alibaba model. Tmall competitor JD.com, for instance, now runs its own version of 11.11, running for 11 days from 1 November, instead of 24 hours. It sold $23bn-worth of goods last year. JD also treats its annual anniversary on 18 June as a shopping event, hoping to capitalise on the sales downturn of the summer months.
Then there is 9.9, a 14-day shopping festival culminating on 9 September, which has been run by Shopee, a Singapore ecommerce platform popular across Southeast Asia and Taiwan, since 2016. Last year there were 5.8 million orders, involving some 10,000 brands across the region. Wang says the more events, the merrier – for consumers, at least.
“If they miss one, there is another,” she explains. “Everyone, [whether] merchants or consumers,
is quite passionate about those promotions. Traditionally, there was Christmas, Mother’s Day, Valentine’s Day – all those holidays are good timings for brands and retailers to launch campaigns to find one more reason to sell more products, and for online it’s the same idea.”
THE RISE AND FALL OF OTHER SHOPPING HOLIDAYS
Besides Christmas, other holidays have shifted in popularity as shopping opportunities. Simon Gregory, group strategy director and partner at Bartle Bogle Hegarty London, points to “the classic seven” in the British retail calendar: Valentine’s Day, Mother’s Day, Easter, Father’s Day, back to school, Halloween and Christmas.
These, he says, set a “firm rhythm” to the year, but while he cites Easter as one of the biggest shopping opportunities alongside Christmas, US retail expert Jan Kniffen says it is now a much smaller component of retail in the US than it used to be.
Halloween, however, is fast growing on both sides of the pond as a shopping opportunity, as is China’s Lunar New Year, which celebrates the start of the traditional Chinese calendar, in the East and in Chinese communities globally. Slowing sales this year sparked concerns about China’s economy but, in total, spending was still up 8.5% year on year.
Model Heidi Klum shopping for a Halloween party in LA, USA, in 2018
Raking in revenue of $148.3bn, Chinese New Year can’t be directly compared with Singles Day because it is a week-long holiday and this figure includes catering sales as well as retail, but it’s still a major consumption driver. Chinese New Year ad campaigns focus on returning to one’s home town and family reunions, and more “traditional gifting”, such as buying jewellery, is still the main shopping component, according to Jonathan Cummings, Greater China chairman of Fitch.
Ramadan is also seen as a time to sell, targeting the world’s two billion Muslims before, during and after their annual month of fasting. Shopping traffic tends to peak in the run-up to the holy month, as people both consume and buy more food in preparation for a period of fasting and for iftar, the evening meal at which the daily fast is broken.
Shopping discounts have become the norm in this period, too. Middle Eastern digital marketplaces such as Noon.com and Amazon.ae, as well as Tokopedia, the equivalent in Indonesia, all now run week-long “pre-Ramadan sales” offering discounts of up to 60%.
Web analytics also reveal a “night-time buzz” as people hit shopping websites in the hours between breaking their fast and restarting it in the morning.
Is there a risk, though, that consumers will tire of all the deals? Indeed, some retailers in the US now choose to stay closed on Thanksgiving Day because consumers complained that commercialism was taking away from family time. In China at least, there are few signs of this, according to Wang. “I don’t think it’s [reached] fatigue, yet. But still, if there are 10 promotions that are very similar, then consumers don’t know which to choose,” she says.
This means a strong marketing strategy will become ever-more important, adds Wang, as will good customer service and a smooth overall shopping experience, including seamless payment and delivery methods, particularly as ecommerce penetration continues to rise around the world.
Kniffen says he thinks the price transparency that the web offers means retailers will soon have to stop relying on point-in-time promotions. Prices will be fixed, and service, time to shop and availability will help brands differentiate instead. This will also make brand loyalty more important than ever. Some of the high-end brands, such as Hermès, Gucci and Louis Vuitton, don’t play in the discounts for this very reason, he says. “They never destroy their brands by dropping the price.”
One coming trend may be for brands the world over to try to hold their own private “shopping festivals”, meaning less reliance on the over- crowded holidays or shopping events scene. The US luxury department store brand Nordstrom has already enjoyed some success with this when it made its June anniversary a sales day, according to Kniffen. There are still many consumers who will wait until the John Lewis clearance sales in the UK, Murphy says. Alibaba is on the case with this, too: it offers Tmall Super Brand days dedicating one specific period to the promotion of a popular rising brand, such as Lululemon, in a “mini 11.11” event that tends to drive sales worth several times more than a brand’s daily intake, Tung says.
Alibaba’s ambitions don’t stop there – take heed, marketers the world over. “We are going to make [Double 11] even more relevant to everyone,” Tung says. “So you are going to see us doing even more sophisticated tiered programmes and tiered activities to make sure, like Christmas or Chinese New Year, there shouldn’t be any segmentation for fun or happiness.”
Or shopping, it seems.