About the Index The DynamicAction Retail Index - 2020 Black Friday Edition analyzes global online consumer transactions over Thanksgiving (Thursday, November 26, 2020) and Black Friday (Friday, November 27, 2020) versus Cyber Monday (Monday, November 30, 2020) and Giving Tuesday (Tuesday, December 1, 2020) which will be grouped together and denoted as “Black Friday” and “Cyber Monday” respectively. The 7 days prior includes November 20, 2020 – November 26, 2020, and Quarter to Date (QTD) reflects October 1, 2020 - December 1, 2020. The Retail Index covers retail within general merchandise, home goods and apparel categories, while excluding grocery and Amazon transactions.
In our 2020 Prime Day Analysis we highlighted the importance of maximizing gross margin by reacting with speed and confidence. This continues to be a requirement for success this holiday season. We are seeing that the most successful retailers are those who are able take a fast read of their business, especially ecommerce, to identify and seize the most profitable opportunities across orders, profit and product.
Let’s take a deeper dive into how Retailers did during this year’s Thanksgiving shopping craze:
Thanksgiving Deals Retain Their Allure for Shoppers
Retailers experienced large gains in their digital channels this year in the face of the continued Covid-19 pandemic. Shipping concerns pushed Retailers to invite shoppers to start their holiday shopping earlier than ever, with some promoting Black Friday marketing campaigns as early as October 1st and Amazon pushing their 2-day Prime Day event to October 13th and 14th. Despite the early start to holiday sales, a large percentage of customers held out for Black Friday and Cyber Monday.
Key Takeaways from the Holiday Shopping Trends
Dueling Holiday Shopping Days
While Black Friday and Cyber Monday have been competing for MVP of the holiday shopping season for over 15 years, this year Black Friday is a clear winner, with Retailers experiencing an 8% increase in Overall Profit per Order on Black Friday when compared to Cyber Monday. Overall Profit per Order on Black Friday was also up 3% versus the prior 7-day period. Demand Availability, which measures the availability of stock that consumers are buying, was 3% greater on Black Friday as compared to Cyber Monday, suggesting that Retailers were not able to fulfill all demand on CyberMonday. It is instructive to note that Retailers were aggressively selling ahead of Black Friday and carrying leaner stocks, as seen with Demand Availability down almost 3% on Black Friday vs the 7 days prior, and down 5% QTD.
Black Friday: A Profitable Retail Success
New Customers (either new to the brand, or new to digital/eCommerce for the brand) were drawn to Black Friday. Retail saw 13% more new customers on Black Friday than QTD, 8% more new customers than the 7 days leading up to Black Friday, and 9% more than shopped on CyberMonday. While Retailers actively attracted new customers to their digital business on Black Friday, they also recognized 4% fewer Unprofitable Customers as compared to Cyber Monday, 23% less than the previous 7 days, and 18% less than QTD.
The profitability of customers sparkled during Black Friday, with retailers gaining new customers and minimizing unprofitable customers. Profit per Order for New customers was up almost 6%, up just over 12% for 2-5 Time Purchasers, up 11% got 6-10 Time Purchasers and up almost 12% for 11+ Time Purchasers on Black Friday vs Cyber Monday. Although all customer cohorts were profitable during the Thanksgiving shopping craze, the 6-10 Time Purchaser glowed the brightest, earning the title of Most Profitable Customer cohort.
A Clear Preference for Black Friday
While early Pre-Black Friday deals brought shoppers out earlier this year, it appears many consumers still held out for the true Black Friday. Retailers’ promotions drove the Average Order Value (AOV) on Black Friday up 4% from the prior 7 days. AOV peaked on Black Friday and then slipped 6% on Cyber Monday. Black Friday also saw a 5% increase in the Number of Items per Order compared to the 7 days prior and then an 8% falloff to CyberMonday.
Retailers Deployed Markdowns and Promotions Selectively
Retailers favored promotions versus price markdowns during Black Friday and Cyber Monday. Although Cyber Monday saw Orders using Markdowns up 6% over Black Friday, Orders using Promotions increased 15% on Black Friday. In fact, promotions were up 18% on Black Friday as compared to the 7 days prior, and up nearly 38% QTD. While retailers started promotions earlier than ever this year, the 48 hours of Thanksgiving and Black Friday remained the most popular period for orders using promotions throughout the periods studied.
“Shipageddon” Drove Modest Shipping Offers
Widespread news coverage alerted consumers to retailers’ battle with increased shipping fees and insufficient shipping capacity, driving many to purchase gifts early to ensure delivery before Christmas. With very few retailers immune to the shipping restrictions imposed this season, Free Shipping offers dropped by 42% from the same holiday shopping period last year. Black Friday was still favored by Retailers for extending Free Shipping offers, with 7% more orders taking advantage of Free Shipping on Black Friday as compared to Cyber Monday and QTD. We saw many retailers require a minimum purchase for Free Shipping on Black Friday, driving the Shipping Profit per Order up on Black Friday by 24% compared to Cyber Monday, up 31% against the prior 7 days and rounded out up 55% as compared to QTD.
Accelerate Profitable Decisions
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