Holiday Markdown Strategy 2019

Introduction

According to the National Retail Federation, an all-time high of 189.6 million US consumers shopped from Thanksgiving Day through Cyber Monday this year,  a 14% hike from last year’s 165.8 million. The digital Black Friday sales in the US hit an impressive 7.4 billion USD this year, second only to last year’s Cyber Monday.

Despite being a traditional post-Thanksgiving sale in the US, other countries have taken part in Black Friday. The volume of transactions was up 7.2% year-on-year in Britain, which saw a 16.5% increase in the value of Black Friday sales compared to 2018.

In this report, we analysed 5 of the biggest fast fashion retailers across UK and US to learn about their discounting strategies during the holiday season.

More than 321,000 data points were tracked from November to December on Asos, Revolve, Fashion Nova, Boohoo and Missguided.

All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.

Holiday Markdown Overview

Before diving into the two main discounting events of the holiday, namely Black Friday Weekend and Christmas Sale, we studied the overall retail performance in November and December.

Asos performed the best with good sell-out rate at 44%, having surpassed the average sell-out of 39%. This was achieved with 63% of discounted products and minimal 12% first-time discounted products.

Missguided and Boohoo had aggressive markdowns throughout the holiday season with more than 98% discounted items of total assortments. This proved to drive sales for Missguided as its total sell-out rate was the highest at 47%. Most retailers offered less than 20% of their assortment on first-time discount during the period, except Missguided.

Total sell-out began to rise steadily as early as in the week of Nov 8, which mirrored first-time discount launched movement, and reached its peak over Black Friday weekend. A steep decline in sell-out followed after, before it gradually increased again towards the Christmas weekend.

Black Friday Weekend

All five retailers decreased the number of SKUs on first-time discount towards the end of Black Friday weekend. The retailers leaned towards offering further markdown on existing sale products instead of introducing new discounted products.

The most common discount range during Black Friday weekend was 50-59% with Asos and Missguided leading the pack.

Asos performed well overall by achieving a higher sell-out rate than the other retailers in the 10-49% and 80-89% discount ranges. Fashion Nova succeeded in driving exceptionally high sell-out in the 50-79% discount range. The rest of the retailers had sell-out rates at below 10% for all discount ranges.

Black Friday weekend typically ends on Cyber Monday with a fresh set of offers but was that not the case for all retailers. Boohoo and Revolve were the only fast fashion retailers that had separate offers. Boohoo scaled down on their sitewide discount, whereas Revolve increased discounting on Cyber Monday.

Sell-out rate at 0% or 100% occurred for products with limited no. of SKUs (less than 10). Retailers with no markers for sell-out indicate that there were no products offered in the specific discount range.

Black Friday Weekend (cont’d)

Main Offer

Boohoo and Missguided were the most aggressive with deep discount offering at 75% and 70% off sitewide, respectively. Asos and Fashion Nova offered 25% and 50% off with the use of promo codes. Revolve had up to 65% off new markdowns.

Additional Offer

Boohoo and Missguided gave away an extra 10% off when promo codes were exercised.

Time Bound

Boohoo was the only retailer to create a sense of urgency by adding a countdown timer that ended at 3pm on December 1. Other retailers ended their offers on December 2.

Free Delivery

Asos and Boohoo provided free shipping during Black Friday weekend.

Boohoo had the most attractive offer with the deepest discounting, additional discounts through promo codes and free shipping. However, the appeal of Boohoo’s offer was not reflected in its performance.

Christmas Sale

A different markdown approach was undertaken during Christmas sale, with 8,726 SKUs launched for the first time. That was 11x more against Black Friday weekend, measured on daily average (7 days of Christmas sale and 4 days of Black Friday weekend).

Performance of First-Time Discounts

Sell-out for the first-time discounted products was 13%, mainly driven by Tops and Outerwear categories.

With a short selling window to clear out seasonal tops and heavyweight outerwear in December, it was not surprising to find retailers discounting these categories upon launch and at the beginning of the month. New arrivals accounted for 15% of first-time discounted products.

Performance of Total Discounts

Discount ranges during the Christmas sale were not as deep as Black Friday weekend. Common discount range was 20-29%, contributed largely by Asos, Fashion Nova and Boohoo.

Missguided triumphed with strong sell-out in the 20-59% discount range. Coming in second was Fashion Nova with high sell-out rates over 60-79% discount range. The remainder of retailers hovered at 3-14% sell-out rate across all discount ranges.

Sell-out rate at 0% or 100% occurred for products with limited no. of SKUs (less than 10). Retailers with no markers for sell-out indicate that there were no products offered in the specific discount range.

Christmas Sale (cont’d)

Main Offer

Asos, Missguided and Boohoo offered deep discounts to generate traffic, with up to 60%, 70% and 80% respectively. Boohoo and Missguided emphasised on sitewide markdowns. Fashion Nova offered 30% off sitewide when a promo code was applied. Revolve did not have an exclusive Christmas sale but 40-49% was its common discount range.

Additional Offer

Missguided was the only retailer with additional discount during the Christmas sale. Shoppers were entitled to an extra 10% off by applying the promo code provided.

Free Delivery

Fashion Nova provided free shipping for orders above USD 75.

The retailer with the most attractive offer was Missguided with 70% off sitewide and an additional 10% discount.

Conclusion

Main Findings

Effective Discounts: Despite retailers offering up to 80% off sitewide, high sell-out during the holiday season was registered for 20-39% range. Consumers are willing to purchase items with lower discounts so long as the products meet their needs. Strong sell-out on Outerwear over Christmas sale at under 40% off, proved that the category was also season-appropriate.

Early Shoppers: The holiday shopping mood began in the second week of November, which was 3 weeks ahead of Black Friday (Chart 2). Consumers continued to look out for bargains in the lead up to Black Friday.

Combination of Offer Mechanics: Asos performed well during Black Friday weekend with leading sell-out rates across most discount ranges. However, it failed to deliver similar success over Christmas sale, where Missguided topped.

The contrast in Asos’ performance between the two sale periods was attributed to the combination of offers executed. The retailer used promo codes and gave free shipping during Black Friday weekend, but these were absent during Christmas sale.

Next Steps for Retailers

Promotional Assortment: Retailers should consider curating a promotional assortment instead of just focusing on marking down slow-sellers. Planning ahead allows capitalising on the hype and traffic generated during the holiday to boost sales.

By backing a new vanilla-coloured cardigan with volume quantity and offered it at 20% off, is likely to drive 30% higher sell-through than during a non-peak period.

Timing Sale: Due to increasing sell-out starting from the second week of November, retailers should start stocking up for the holiday season as early as in October. Retailers can start discounting in early November and implement further markdowns in the week leading to a major discounting event.

Singles’ Day on Watchlist: Singles’ Day has famously overtook Black Friday in global sales volume but yet to gain traction among the retailers in the US and UK markets. Retailers in the western hemisphere can rely on Omnilytics to monitor discount movements on Singles’ Day across the other regions to capitalise on early signs of demands.