Black Friday Retail Consumer Behavior 2013


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5 Rules For Retailers Preparing For Black Friday:

Deal hunters may flock to discounters, but few ever become brand loyal. New customers may make up close to 90% of holiday shoppers, but less than 9% will return in the subsequent 45 days.

Loyal customers loathe long lines caused by holiday crowds so offer pre-holiday teaser promotions to this segment. Loyal customers as a percentage of overall shoppers decreased by 12.0% and 20.5%, during Columbus and Labor Day, respectively. Those that did shop during these holidays preferred off-peak hours of 10AM-11AM or 7PM-8PM.

Holidays re-energize dormant customers who return at rates similar to that of loyal customers after shopping during a holiday. Marketers would be wise to launch targeted campaigns to extend the lifecycle of these high value customers.

Holidays have outsized impact on suburban mall shoppers. During Labor Day malls experienced 231.5% increase in store visits compared to only 111.2% for urban retailers.

POS data only tells part of the story. To calculate the ROI of holiday campaigns, retailers need to leverage Nomi to calculate how campaigns lift loyalty and retention rates.

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Black Friday Retail Consumer Behavior 2013

  2. 2. OVERVIEW • While New Customers represent nearly 90% of store visits during recent holidays, only 9% of those customers return in the ensuing 45 days. • Dormant Customers who visited a retailer during recent holidays returned at rates comparable to Loyal Customers AND at a similar velocity to New Customers. This indicates holidays are highly effective opportunities to restart the customer lifecycle. • Loyal Customers prefer to avoid holiday crowds. The percent of overall visitors who were loyal customers decreased during both Labor Day & Columbus Day weekends. • Those Loyal Customers who do shop during holidays represent the largest percentage of visitors between 10AM-11AM and 7PM-8PM. This indicates that they prefer less crowded off peak hours. 50% of these visitors returned within 9 days. • Labor Day disproportionally impacted consumer behavior at mall locations compared to urban stores. Store visits at malls increased by 231.5% and mall visitors increased the amount of time spent browsing locations by 113.3%. ABOUT THE STUDY’S METHODOLOGY The findings in this report are based on consumer foot traffic to a sample of 85 retail locations in key markets throughout the United States. Data represents actual aggregated anonymous measurements, not surveys. THE HOLIDAY EFFECT 2
  3. 3. CUSTOMER SEGMENTATION LOYAL CUSTOMERS EXHIBIT DISTINCT BEHAVIOR DURING HOLIDAYS LOYAL CUSTOMERS AVOID HOLIDAY CROWDS COLUMBUS DAY REPEAT CUSTOMER RATE 13.8% LABOR DAY REPEAT CUSTOMER RATE 12.2% 11% 10.8% 9.5% 9.7% During two recent holidays, the concentration of loyal customers as a percentage of overall shoppers decreased in comparison to the weeks before and after. This indicates loyal customers prefer to avoid holiday crowds. Anticipate demand from loyal customers in advance of Black Friday and plan to staff stores accordingly. RECOMMENDATION • Promotions targeting loyal customers should be redeemable before or after the holiday NEXTWEEK PRIOR WEEK • Promotions targeting new customers should be redeemable day of with an emphasis on on site promotions that lure in casual browsers off the street. LOYAL CUSTOMERS PREFER OFF HOURS ON HOLIDAYS PERCENT OF VISITORS IN STORE WHO ARE LOYAL CUSTOMERS 17.7% PERCENT REPEAT VISITOR RATE AT END OF DAY 17.7% 12.2% 12.4% RECOMMENDATION • Segment your customer base by offering promotions that cater to the casual consumer during peak hours to avoid bottlenecks for loyal customers who prefer off hours. +69.0% PERCENT INCREASE COMPARED TO DAY’S MEAN REPEAT RATE During Labor Day, the concentration of loyal customers as a percentage of overall shoppers peaked between 10AM-11AM and 7PM-8PM. Loyal customers who did shop during the holiday purposefully picked off hours to avoid the hassle of harried shoppers. 10AM 7PM LOYAL CUSTOMERS APT TO ABANDON LONG LINES PERCENT OF CUSTOMERS WHO BOUNCE 10.7% 10.7% 12.2% PERCENT BOUNCE RATE AT END OF DAY • +17.5% PERCENT INCREASE COMPARED TO DAY’S MEAN BOUNCE RATE 18 C opyright © 2013 The N ielsen C ompany • 10AM 7PM The highest concentration of loyal customers during Labor Day occured at the end of the day. This coincides with the highest bounce rates of customers who enter and exit a location in less than one minute. Whether this is the result of long lines or subpar service from sales associates who are exhausted after a frenzied day, retailers run the risk of alienating loyal customers. RECOMMENDATION • Deploy new staff as end of day approaches to ensure loyal customers receive attentive service THE HOLIDAY EFFECT 18 3
  4. 4. CUSTOMER CONVERSION FUNNEL HOW TO AVOID THE HOLIDAY HANGOVER CONVERSION FUNNEL FOR LABOR DAY SHOPPERS 9% OPPORTUNISTIC BUYERS 30% New customers may represent close to 90% of holiday foot traffic, but the lift is transitory. Less than 10% of these first time visitors will return again in the ensuing months. Whether browsing for entertainment or opportunistically capitalizing on holiday discounts, this segment does not demonstrate sustained brand loyalty. OF NEW CUSTOMERS RETURNED IN THE NEXT 45 DAYS OF LOYAL CUSTOMERS RETURNED IN THE NEXT 45 DAYS 27% RECOMMENDATION • OF DORMANT CUSTOMERS RETURNED IN THE NEXT 45 DAYS To capture a share of this segment’s wallet, marketers would be wise to offer on site promotions that are redeemable only that same day. LUCRATIVE LOYALISTS 50% While loyal customers represent less than 10% of overall shoppers during the holiday, these customers are noteworthy because of the velocity of their repeat visits. Over 50% of loyal customers who return will do so within 9 days of the holiday. OF LOYAL CUSTOMERS WHO RETURNED POSTLABOR DAY, RETURNED WITHIN 9 DAYS RECOMMENDATION • This audience is receptive to bounceback promotions. Launch direct mail and email campaigns featuring some form of bounce back incentive. +9 DAYS DEPENDABLE DORMANTS DORMANT CUSTOMER RETURN RATE NEW CUSTOMER RETURN RATE Labor Day sales effectively “re-energized” dormant customers who had not visited a location in the prior 45 days. After shopping on Labor Day, this segment returned at rates comparable to that of loyal customers. Equally noteworthy, the velocity of returns parallels that of new cusomers. It is as if the in store experience reignites brand affinity, restarting the customer’s lifecycle in the process. RECOMMENDATION • +10 DAYS +20 DAYS +30 DAYS +10 DAYS +20 DAYS +30 DAYS Visiting a location during a holiday substantially increases the likelihood that a dormant customer will re-engage with a retailer. In the lead up to a holiday, marketers should aggressively offer promotions to this segment that are redeemable in store only. THE MIDDL E STATE OF MIND OR EFFECT THE HOLIDAY SH AR E OF WALL ET4 ?
  5. 5. STORE FORMAT SEGMENTATION HOLIDAYS MAY HAVE OUTSIZED IMPACT ON MALL LOCATIONS Mall Locations Urban Locations LABOR DAY INCREASE IN STORE VISITS 231.5% 111.2% INCREASED CONVERSION OF WINDOW BROWSERS 135.6% 120.0% INCREASED TIME SPENT BROSWING PER VISIT 113.3% 104.2% The Labor Day holiday disproportionally impacted the shopping habits of visitors to suburban malls compared to their urban counterparts. Critical aspects of the customer conversion funnel exhibited this trend. At the top of the funnel, traffic to malls increased by 2.1x as much as urban locations. This suburban segment seems to be more receptive to the discount driven marketing associated with holidays. They may also prefer the in store experience to that of online. RECOMMENDATION • Marketers should anticipate disproportionately increased staffing needs in mall locations. In the middle of the funnel, mall shoppers were 1.1x as likely to enter a store after window browsing compared to urban shoppers. Mall shoppers appear to be much more receptive to exploring new stores during this holiday period. RECOMMENDATION • Marketers should emphasize visually arresting window displays and experience based incentives at mall locations during holiday periods to attract these casual browsers. Mall shoppers also spend 1.1x more time browsing during holiday periods than their urban counterparts. RECOMMENDATION • Marketers should evaluate how best to engage browsers’ attention through in store signage. THE HOLIDAY EFFECT 5