What Should And Shouldn’t Be Discounted For Black Friday 2022

Though the event is rapidly approaching, there is still time for retailers to make last minute tweaks to Black Friday pricing strategies.

This report determines what should and shouldn’t be marked down to save margins from unnecessary damage – a must-read for all businesses during these challenging economic times.

EDITED Retail Intelligence combines world-class data with real-time analytics, giving you the tools to win the golden quarter. Get in touch to find out more. 

Key Takeaways

• The cost of living crisis, overstock issues and first discounts already 5% higher than last year all point to an aggressive Cyber sale. This makes it crucial for retailers to leverage EDITED Market Intelligence to ensure the right products are marked down to preserve margins and minimize return rates.
• Advertised discount levels this year span conservative brackets of from 10%-20% to 60%-70%. This is reflective of the balancing act retailers are facing, of moving overstock and recognizing rising living costs, while also preserving the perceived value of products.
• Avoid price reductions on products with ‘thermal’ properties, targeting novelty categories like festive sleepwear over cost of living essentials such as tops and underwear. Recognize the commercial promise the prep school narrative holds over collegiate products for SS23, forgoing discounts on transeasonal shapes like polo shirts, varsity bombers and loafers.
• Consider targeting small leather goods, jewelry and stocking stuffers to avoid fit-related returns. Offer promotions on seasonal items such as festive novelty knits, cardigans and slow-moving outerwear styles to avoid being stuck with stale inventory post holidays.

The Current State of Play

The Cost of Living Crisis

A challenging run up to Christmas is anticipated, with footfall across all UK retail destinations dwindling month-to-month by 4.9% in September, 2.5% in October and 0.3% in November, eradicating gains made in 2022. Combined with increased living costs dampening consumer spending, a return to traditional blow-out sales to entice frugal customers is expected. This is a departure from the trend of the past few years of conservative Black Friday deals in the hope of clawing back the margin due to peak-COVID panic discounts.

Recent Sales Events have Fizzled

A lot is riding on this year’s Cyber events as retailers who have participated in prior sales have been met with a lukewarm response. Amazon ran a sequel to its signature Prime sales event for the first time to combat the expected conservative holiday spending. Results were mixed as sales tracked the same as a typical day eight hours into the event. Chinese retailers are bracing for a slow Singles’ Day due to Beijing’s zero-COVID policy and the ongoing property crisis.

Retailers are Rethinking Black Friday

More consumers are passing over events rooted in overconsumption, while this year’s predicted steep reductions could set retailers up for an unprofitable Black Friday. Brands still looking to participate in Cyber sales may want to consider promoting small businesses to balance heavy markdowns or communicate rental, repair and resale for a more sustainable message.

Image via Monki UK

Overstock Issues

Last year, retailers faced the problem of ongoing supply chain bottlenecks resulting in high demand for fashion and fewer products in stock. However, this time, retailers are experiencing increased inventory levels, and waning demand as customers prioritize purchasing essential goods. The number of products in stock across US and UK online retailers has risen 13% YoY, indicating retailers need to balance churning through goods to appeal to the consumers pulling back on spending while trying to keep margins intact.

First Discounts are at a Two-Year High

The state of the economy has led to more products being discounted for the first time in the lead-up to Black Friday, suggesting aggressive markdowns will be present during thee course of the event. The number of first discounts for October is up 5% YoY, eclipsing even 2020’s pandemic-influenced discounting by 8%.

How Much to Reduce By

The proportion of products in stock with an advertised discount has increased by 6pp YoY. While last year, the 30%-40% bracket was the most popular, accounting for 31% of advertised discounts, this year it has declined by 19pp. In its place, retailers favored the 10%-20% and 20%-30% brackets; however, these more conservative discounts were not reflective of overall tactics, with the share of price slashes between 50%-60% growing 7pp YoY.

In the US, retailers maintained a strategy that focused on discounts across several brackets, rather than focusing on a single level of markdown. Overall, products currently in stock show a 4pp increase YoY in products with advertised discounts, with brackets of 20%-30% and 60%-70% the most populated.

Shein Email US – Nov 2, 2022

The Categories to Target

US Retailers

Following suit from 2021’s discount strategy, retailers should target the inventories of the tops and bottoms categories, which are sizeable enough to withstand price drops. Identify shapes that are less dependent on an exact fit, like oversized and relaxed T-shirts, sweatpants and wide-leg trousers as a way to mitigate post-sale returns.

Choosing to target the region’s assortment of accessories, which is dominated by jewelry and headwear, could offer some relief from the returns associated with categories more dependent on sizing and fit.

UK Retailers

The tops category dominates just under a third of all products in stock currently, providing a vast landscape for retailers to discount without fear of exhausting inventory. Following significant discounts in the UK last year, retailers should pinpoint slow-moving plain T-shirt designs, offsetting any inflationary increases on ‘basics’ that may have hindered movement.

Accounting for under 10% of products in stock currently, retailers are pulling back on outerwear investment as a response to the unusually mild temperatures of the region. Anticipate a late surge in demand for warm-weather shapes across Black Friday weekend, discounting premium designs modestly with the knowledge that customers are willing to pay a higher full price for good quality outerwear.

What to Avoid Marking Down

Menswear

Retro sneaker silhouettes are experiencing a revival propelled by ongoing nostalgia stories and growing subcultures such as Blokecore. With the influence of the 2022 FIFA World Cup helping sustain interest across the back end of this year, and subsequent trend forces including Match Fit sportswear stories providing SS23 tie-ins, maximizing full-price sales is essential.

Collegiate influences are positioned for renewed success across 2023, benefitting from a new lease of life across Spring from the next gen prep boy visual – avoid marking down bomber shapes that will bridge the transition between seasons.

Womenswear

Despite ongoing economic pressures, customers are showing a willingness to invest in premium quality apparel that will hold longevity beyond that of mass market offerings. Identified in EDITED’s recent 10 Things Consumers Want Now report, cashmere has shown an uptick in searches on Google from August onward. Hold back on price slashes for the premium fabric that might jeopardize your ROI.

A trend rapidly gaining momentum, the Bikercore aesthetic will continue to spill over into Spring 2023. Curb any desire to mark down color-blocked moto jackets, focusing instead on fur-lined aviator styles.

 
Marks & Spencer, &Other Stories, Bershka

Childrenswear

First entering the market as a result of Balletcore iterations, the ballet pump has retained its position as a key fall footwear style, flourishing at full price thanks to the revival of Preppy and Twee trend narratives. Look to the January back to school period for the next opportunity to push designs in uniform-appropriate black, instead targeting the significant proportion of metallic-hued designs.

Remain cautious with price reductions on products with ‘thermal’ properties as customers seek alternative ways to keep warm during a global energy price surge, targeting novelty categories like festive sleepwear over cost of living essentials like tops and underwear.

 
Uniqlo, Mango, Zara

What’s Prime for Reduction

Menswear

New velour and velvet products arriving over the past three months have already experienced discounting at boohooMAN and River Island, while products at Zara and adidas have moved slowly. Apparel in the tactile fabric is optimal to reduce as customers seek out novelty purchases for the party season, alongside festive sweaters.

While buyers will be drawn to winter warmers, cardigans can be marked down due to their lackluster performance – the number of majority SKU sell outs since August has fallen 48% YoY. Consumers’ penchant for more relaxed fit styles has led to slim-fit jeans becoming menswear’s most discounted cut, providing denim merchandisers with the opportunity to clear through stagnant stock over Black Friday.

Womenswear

The low-rise renaissance has resulted in 40% of discounted jeans in stock being described as being high waist. Retailers should be methodological with their markdowns here, as this cut remains a firm consumer favorite. Use this sales period to target old or underperforming styles and ensure those with planned replenishments stay at full price.

While bodycon styles are bookmarked for Spring 2023 partywear, 18% of new arrivals have been discounted, indicating retailers are struggling to move what’s in stock now. Target basics like jersey bodycon dresses and skirts to appease customers looking to shop for items with longevity more affordably.

 
Old Navy, New Look, boohoo

Childrenswear

First entering the market as a result of Balletcore iterations, the ballet pump has retained its position as a key fall footwear style, flourishing at full price thanks to the revival of Preppy and Twee trend narratives. Look to the January back to school period for the next opportunity to push designs in uniform-appropriate black, instead targeting the significant proportion of metallic-hued designs.

Remain cautious with price reductions on products with ‘thermal’ properties as customers seek alternative ways to keep warm during a global energy price surge, targeting novelty categories like festive sleepwear over cost of living essentials like tops and underwear.

 
Janie & Jack, Abercrombie & Fitch, River Island

There’s no replacement for hard data when you’re tackling your trickiest discounting decisions. Get in touch here to learn how EDITED can help engage customers without sacrificing margins during peak sale periods.

Contributions by Katherine Bailey & Kayla Marci.

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