Retail peak season is fast approaching. However, with mounting financial pressures causing many people to tighten their belts, this time could prove difficult for traders.
While discounts and sales are one possible solution to entice shoppers to make purchases, a new report from e-commerce service provider Dressipi shows that arguably the biggest event of the season, Black Friday, could be in decline.
Black Friday is losing relevance
Dressipi analyzed data to help retailers prepare for the big day. However, the research revealed that the event, which falls on November 25 this year, is becoming less and less popular among consumers.
According to the study, Black Friday contributed an average of 9% to a retailer’s annual sales in 2019, with sales growing 73% compared to the previous two weeks.
In 2020, this number had already dropped to 5.82 percent and a year later it dropped again to 5.18 percent.
The report cites a number of possible factors that may have contributed to this downward trend, such as increased discounts from retailers looking to sell off their excess inventory, or sustainability considerations encouraging people to make more conscious purchasing decisions.
New customers are less profitable
The study also found that the average return rate on Black Friday fell by 17.14 percent. This fact is probably due to the fact that the top-selling items that day were accessories, a category that already has low return rates.
Bags, for example, have a typical return rate of 7.22 percent, while clothing items have an average return rate of 49 percent.
In this context, it is also questioned how valuable Black Friday customers actually are and Dressipi found that among them on average about 12.5 percent are new customers.
However, the platform’s findings revealed that these customers are potentially less valuable than loyal customers, as they are 10 percent less likely to make a repeat purchase.
This group is also less likely to make repeat purchases, resulting in 4.8 percent lower average annual sales than repeat customers.
Dressipi suggested that new customer promotions should focus on higher-margin products, while existing customers should have broader promotions to increase order frequency.
This translated and edited post previously appeared on FashionUnited.uk.