Retailers this past holiday season and into the new year are demonstrating a new promotional pattern — a consequence of reserving their best deals for Black Friday, according to research on holiday discounts in the U.K. and U.S. from retail and fashion technology firm Edited. Holiday promotions this past season often centered around free shipping, in-time Christmas delivery, and sitewide sales or percent discounts on an entire order, according to the report.
Now, in January, many retailers have replaced New Year blow-out sales with targeted emails to loyal customers or deals on select merchandise, like activewear, for example, which might resonate with shoppers contemplating new habits, according to the report. Many tagged their emails as "Sale Previews" or "Private Sales," which Edited noted carry a "fresh feel that generates interest in the wake of Black Friday promotions."
The approach shows that several retailers accomplished more inventory sell-outs before January than in recent years and have been able to pivot to marketing new merchandise, Edited said. The firm found a "38% increase in newsletter mentions of new products in the US compared to this time last year" at apparel merchants like ASOS, H&M, Topshop and Forever 21. Additionally, Uniqlo is offering free delivery on selected spring items to boost spending on full-priced items, Edited also said.
Those retailers reserving their biggest, broadest discounts for Black Friday and the weeks before Christmas Day may have spared themselves headaches around discounting, inventory and marketing.
"While we have no way of knowing exact stock levels, this strategy does indicate the desire for retailers to avoid the inventory hangover that follows the holiday season," Edited Retail Analyst Krista Corrigan told Retail Dive in an email. "Meanwhile, the consumer already expects sharp Black Friday deals and that will likely go unchanged for some time. The heavy discounting throughout December demonstrates the willingness to sell goods at a smaller discount than would be required to clear through it in January."
Inventory troubles, demonstrated so starkly at H&M last year, have been a mostly under-appreciated issue for months, according to Instinet analysts led by Simeon Siegel. "Inventory isn't as clean as it seems," Siegel said in an October note emailed to Retail Dive. "Since summer, we've noted [that, with] excess inventory shifted to off-pricers."
Limiting the majority of the most drastic discounting to Black Friday could help smooth that out, Corrigan said, noting that Edited's report in general "hints at retail efforts to move away from the vicious cycle of marking down entire assortments come January and instead opting to leverage Black Friday — a time period that already holds high price cut expectations. By clearing stock earlier, brands can maximize margins and retrain consumer behavior not to wait post-holiday to make personal purchases. Moreover, this will prevent the cannibalization of new deliveries and assist in inventory regulation."
But without huge blaring discounts and with newer inventory, those retailers that have managed to clear out inventory by now are turning to creative, and more targeted, marketing to keep shoppers' attention.
Activewear promotions have been popular in January in the U.K. and the U.S., but H&M is also promoting a "wardrobe detox," offering 15% off an in-store purchase when they drop off their unwanted clothes, whether used or rejected holiday gifts. That's a program with potential, according to Corrigan.
"With a growing emphasis on 'going green' and bettering practices across the retail industry, H&M is certainly not the first to entertain this idea," she told Retail Dive in an email. "Madewell and J.Crew have also encouraged denim recycling for a $20 purchase toward your next pair of jeans. Target followed suit for a limited time and offered a 20% discount for any recycled denim. These strategies are a fantastic way for brands to grab attention which resonates well with younger consumers."