PwC: Promotional Activity Rises But Discounts Less Extensive

According to new data from PwC, which tracks daily promotional activity of 206 online retailers, there has been a slightly higher level of retail promotions this year, with activity peaking around Black Friday weekend. 

A steady level of promotions in October and early November, rose sharply in the build up to Black Friday, and peaked with 90% of retailers offering some kind of sale or promotion across the event. This compared to an 85% average in the previous three years, as retailers capitalised on consumer interest and a desire for early Christmas shopping this year.

But as we have seen in recent years, many retailers are being disciplined and reining in promotional activity post Cyber Monday, with participation dropping to 61% on 1 December as they seek to restore margins during these peak Christmas shopping weeks. This year, it is also at a time when non essential retail reopened in England and shoppers returned to the streets . However, unlike previous years, retailers are not expected to discount as heavily in the week before Christmas with most returning to more regular, albeit slightly higher than average, levels of discounting after Black Friday weekend. 

Discounts on offer whilst broader are shallower than in previous years. This Black Friday there were half as many general merchandise blanket promotions (discount across the whole store), just 13% compared with 25% in 2019. This suggests that some retailers don’t have the stock surplus issues that many assumed they would this Christmas as many categories recovered post the first lock down and there was more cautious ordering earlier in the year.

Fashion retailers are bucking this trend and continue to pursue blanket promotions in a bid to clear excess stock. This category continues to struggle to convince consumers, who have less occasions to attend and therefore less reasons to spend on clothing. 

Lisa Hooker, consumer markets lead at PwC, said;

“Our analysis shows that retailers are being smarter around promotional activity, particularly for Black Friday. Reining in promotions between Black Friday and Christmas whilst also injecting some newness gives shoppers a reason to browse and spend, but this year also allowed retailers to capitalise on any potential spend as lockdown restrictions eased and non-essential stores reopened in time for Christmas shopping.

“We expect an increase in promotions as we head towards Christmas and into the Boxing Day sales but these are likely to be planned, targeted and not as heavily discounted as we’re used to seeing. Retailers are learning to use their approach to promotions more effectively, and this year it’s important that they hold onto as much margin as possible.”

“In a number of categories reports of excess stock seem to be wide of the mark, which means retailers aren’t desperate to offload overstock at margin-eroding discounts. This is particularly prevalent in general merchandise, which has been affected by stock delays and reported shortages. So don’t wait too long for that must have present or treat as it may sell out and never hit the sales”.

Source : PwC

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