What:  Available options for US Brands and Retailers entering the Black Friday and Cyber Monday week.

Why it is important: All department stores have been affected by overstocks this year, due to the lockdown closures (817 days cumulated for all IADS members). Looking at how the highly competitive, discount-driven US market (where most of the department stores played and lost) can give examples on how to address future promotional periods of time when giants like Amazon are able to play outside the calendar. Being extremely precise, making geolocalized or tailor-made promotions individualized could be a way to exit dangerous strategies based on heavily discounted at the end of the season for stock reasons.

Context is highly uncertain and volatile this year for retailers. In the US, Amazon Prime Days’ rescheduling to October reshuffled the promotion calendars and customers’ expectations, by taking over the landmark role Black Friday has played so far. For the rest of the retailers planning to start their promotion cycle this week, message clarity is key: customers need to understand that they will not get higher markdowns later in the season, otherwise this will affect their purchases.

In addition, customers are scared and tend to favour online shopping (all the more than new lockdowns might be decided in some countries or cities due to the virus’s second wave). Online competition is fierce and, as a consequence, not only increases the cost of operation and advertising but also questions the ability of the logistical networks to support the stress test of the coming holidays. Retailers need to be prepared to pay the price of it, affecting margins, and face angry customers too. This is a reason why alternatives to shipping like in-store pickup are more than ever solutions to be looked at.

Finally, the question of how to lure customers in without exclusively relying on discounts – not a novelty this year as many retailers had to let go of Spring stock – is key. Making sure promotions are well-targeted, either on the proper categories according to new trends (stay at home effect) or on overstocked merchandise (to limit the impact of overall margin) are two strategies explored by players on the market.

Overall, the key question of a discounting strategy remains as vivid as ever. Some brands are refusing to play this game (Patagonia, Allbirds) but the novelty is that doing so can be seen now as a part of a sustainability strategy (or properly marketed stance): “we do not do discounts, because we refuse to overstock our goods”.

This Is How Black Friday Works in a Pandemic