Hi! I’m Eliza Fisher, Annex Cloud’s Marketing Strategist and Editor. I live and breathe retail, and I have tons of thoughts about how I, as a female millennial consumer and too-frequent online shopper, should be marketed to. For another blog post from my personal perspective, check out “I’m a Female Millennial and This is How eCom Sites Need to Market to Me.” Now here’s my take on how Black Friday went wrong, and what retailers can do to fix it next year.
Black Friday broke e-commerce records this year, with online sales up 21% year-over-year according to Adobe. Beyond that, mobile sales contributed to $1.2 billion of that on Friday the 25th alone. Needless to say, there’s a lot to celebrate here, and as I write this Cyber Monday is still in full swing, promising even more profit for thousands of businesses. Even sellers outside the US are benefiting, with spending and in-store traffic at UK chain stores up across the board.
Of course, all is not well in the land of pumpkin pie leftovers and 60% discounts. By now you’ve probably heard of the ransacked Nike store near Seattle.
In terms of metrics, the numbers aren’t very clear yet for in-store traffic in the US, but it looks like the overall trend is that online is “cannibalizing” in-store sales, and with good reason. Here’s where my story of where Black Friday went wrong starts.
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Ulta Online: Not So Ultimate Beauty Deals
As you’re probably aware, many companies took the route of offering promotions all week long, or at least Thursday though Monday. Ulta Beauty, a large cosmetics retailer and arguably Sephora’s only real competitor, was one of them. I was perusing their online offers on Sunday morning, and found myself intrigued by some of them and baffled by others.
While some items were legitimately discounted, e.g. 30% off, many more were crafted for the upsell and had tons of preconditions. Buy one, get one 50% off; free gift with purchase; spend $35 on X brand and get a free sample…
Some of the “free” gifts with purchase were so unrelated to the purchase it was almost laughable…
There was one very smart offer that I noticed, though: if you spent $75 with them on Cyber Monday, you qualified for a bag of samples. While beauty product samples can be totally free if you look in the right places, businesses like Birch Box and Ipsy have lasted for years on just them. Ulta’s offer is totally mindless, just a collection of minuscule-margin items of which I’d use about 50%, but it’s placed at just the right price point to tempt shoppers.
The main difference between this offering and the other ones mentioned are that this one is site-wide and doesn’t apply to a specific brand or product. It’s general enough to be vaguely useful.
Despite my complaining here, I ended up putting about a dozen items in my cart on Sunday morning. They were mainly a combination of purely discounted products, as well as buy one get one 50% off deals on products I already use and know I’ll need to replace in the somewhat near future.
Because I’d already spent so much money on gifts for others and myself this past week, I decided to stave off the purchase, but ended up going to the closest Ulta store later that day. This is where their Black Friday went wrong to a whole new degree.
Ulta In-Store: Where Is Everything?
I went to Ulta’s store to try on products, which is one of the major limitations of beauty e-commerce. As soon as I walked in, I was struck by the towers of pre-packaged gift sets, which are generally not good gifts due to the smaller size of the products and the fact that you have less choice in what you get.
Really, they’re only good presents for (1) friends who legitimately love these sparkly gift sets (I don’t know very many), (2) people you don’t know very well, or (3) when the set happens to include or be based around a product you really believe in.
Other than these types of sets–and their “free” luxury bathrobes–Ulta’s store really didn’t have anything in the way of Black Friday discounts. I noticed a set of hand moisturizers from Bliss that I’d been eyeing online. It turned out they were twice as expensive in-store due to a seemingly misguided online-only special.
Beyond that, I was on the lookout for two products that they didn’t even carry in the store. I walked out after about 10 minutes, confused about why Ulta wouldn’t want to have a more exciting in-store experience that matched up more with its online presentation. Maybe their numbers will be fantastic, but this potential customer was disappointed.
Takeaways: Where Ulta’s Black Friday Went Wrong
In essence, Ulta’s missteps boiled down to two major factors. Their offers weren’t straightforward, and their in-store deals weren’t nearly as good as their online ones. Like I said earlier, perhaps the labyrinth of buy two get one free, free 5-piece travel set with $50 purchase, and so on attracts tons of shoppers who pay a little less attention to what they’re actually getting when they reach those purchase thresholds, or who just have more money to spend. For me, though, there are too many products but paradoxically too little choice and not enough value.
Furthermore, if Ulta’s aim is to drive online purchases over in-store ones, they’re probably doing a good job. However, if they’re concerned about foot traffic, it seems like a simple enough fix would be to at least get rid of the online-only promotions, if not to go further and heavily market exclusive in-store deals. While Black Friday went wrong for Ulta, I was impressed by certain other retailers’ approaches to it.
Where Black Friday Went Right
As both a consumer and a marketer, I was attracted to companies whose promotions fell into a variety of categories…
Cause-Based Marketing: You probably heard of how Patagonia donated all the proceeds of their Black Friday sales to grassroots environmental organizations. This is highly laudable and I’m positive that it boosted their social capital and trust factor, priming shoppers for future, full-priced sales with them.
Not all companies can afford to take this approach, though. I was struck by the amount of small- and mid-sized businesses that I follow who were practicing some sort of Good Karma Friday approach on a smaller scale. Many retailers were advertising that a smaller portion, usually 10%, of their profits were going towards the charitable organizations of their choice.
While this probably put off certain shoppers who don’t agree with the stores’ chosen causes, other consumers were definitely emboldened to spend more.
Straightforward and Sitewide Discounts: I also noticed a fair amount of sellers doing a very straightforward sitewide sale, often 20% to 30%. If I’m curious about a new brand, 20% may not be enough to fully pique my interest. However, if I’m already a loyal customer, this range of discount will assuredly motivate me to shop.
British fashion site ASOS did 30% off their whole site from Thanksgiving through Cyber Monday. I’ve been buying from them for at least about 8 years, and at this point it’s a given that I’ll buy something from them any time there’s a sale. The selection is always spectacular, and I know I can find show-stopping clothing and shoes there. I actually ended up making two purchases this past weekend!
Direct-to-consumer beauty brand Glossier also had a sitewide sale, but only for 20% off. Loyalty definitely drew me in, as I like their products and think that they’re fairly priced even when they’re not on sale. However the biggest motivator here is that Glossier never, ever does sales.
Pure Necessity, With an Upsell: The only successful in-store shopping I did over the weekend was at Target. It’s right next to my local Ulta, and I wandered in there in search of beauty products after being so disappointed by them. While I would have made a certain amount of purchases at Target regardless of any promotions, I was definitely encouraged to buy more due to a 15% discount on all in-store purchases that day.
I wasn’t even aware of the promotion before I came in, but it’s one that I’m sure helped increase average order size at their brick-and-mortar locations. 15% is the sort of discount that usually doesn’t make a huge difference for shoppers at the end of the day, but it seems sizable enough to encourage additional purchases.
Furthermore, many people, despite having their smartphones with them at all times, aren’t great at doing the math for 15% off either in their head or on the go, so they don’t have a great understanding of how insignificant it is. And let’s be honest, I kind of fell for it!
Honorable Mention: Discounts for Buy Online, Pick Up In-Store: Last and pretty much least, Macy’s gets an honorable mention. My mom and I were looking at Tempur-Pedic mattress pads online on Friday, and they had the best price. Beyond that, they had an offer to take off an additional 20% if we picked up the mattress pad in-store. It seemed too good to be true, especially for a product that’s normally quite expensive. And, it was: It turns out that no Macy’s in Los Angeles had one in stock. Still, if this is cost-effective for your business’s logistics, it’s a really alluring offer for customers and could also prompt more in-store shopping.
Going back to our earlier topic of irrelevant gifts with purchase, though…My friend bought a Chloe perfume at Macy’s over the weekend and ended up getting a free…set of plates!
For more information on holiday 2016 shopping trends, check out Unwrapping What Millennial Holiday Shoppers Want in 2016, 6 Vital Holiday Retail Drivers for 2016, and 5 Black Friday 2016 Trends that Retailers Need to Know. And when you’re planning for 2017, don’t forget about these guides!