Why marketers shouldn’t blame the RBA Grinch for stealing Xmas sales
Taylor Fielding, managing director at TFM Digital, argues that there’s still room for marketers to feel optimistic this holiday, despite the cost-of-living crisis and the latest interest rate hike.
Black Friday is the largest sales event of the year, now slaying (sleighing) even Boxing Day sales. And just like ‘Home Alone’ on our screens, every year it’s arriving earlier and earlier, thanks to the wonder of Christmas creep.
However, it’s no longer only retail brands that follow this festive rhythm – all organisations looking for summer sales are now required to start earlier. That includes all SMEs wanting to avoid the naughty list, retail or not.
Christmas creep
The importance of timing is the key aspect for marketers looking to make the most of this crucial sales period of the year. In 2022, the Australian Retailers Association (ARA) confirmed that a third of Christmas shopping is done before Black Friday. And another 25% is done by the end of Cyber Monday. I expect this number will be even larger this year, with the latest interest rates rise likely hitting mortgage repayments for most from December.
Where retail leads, others must follow
Now is the time to act though, as all brands are competing for the same slice of disposable incomes. While retailers are usually the most prominent during the festive period, all SMEs are also drawn into this timing, with 60% of Christmas presents having been bought before the end of November. So getting into the consideration bucket should have already started for most.
SMEs are fully aware that with a reduced disposable income for the majority of Australians, thanks to the thirteenth rate rise since May 2022 this month, 30% of shoppers are looking to cut their gifting budgets this year. There is little point in waiting until the Boxing Day sales, with budgets reduced and that sales period diminishing by the year.
It’s not too late to make the most of this Black Friday period; with news from last October that there was a decline in revenue growth, it appeared Aussies were waiting, as sales peaked in November, with over six million of us making a purchase online during the month.
My advice to all is to act now to avoid Christmas regret.
Value is paramount
Competing for attention this year is going to be about delivering value. A recent Deloitte report found that 71% of Australian retailers plan on discounting more than last year. This was confirmed by TFM Digital’s own market analysis which found brands that don’t offer a deal are likely to miss out on those budget-conscious shoppers. Which, given the current economic climate, could potentially reduce market share.
Paul Zahra from Australian Retailers Association recently commented: “With increased competition and reduced spending across discretionary categories, retailers will be mindful of shopper’s shifting spending focus and will be motivated to entice shoppers however they can.”
While many are reducing budgets, the outlook as a whole isn’t as bleak, with overall spend predicted to increase year-on-year, albeit by the smallest of margins at just 0.6%. Indeed over half of retailers (57%) are predicting an increase in year-on-year sales.
Knowing your audience
Hidden within that same ARA and Roy Morgan data was the revelation that 9% of customers are planning on spending more this year. Combined with the 61% who are looking to maintain their spending, it’s an opportunity for those who understand their audience.
We’ve analysed consumer behaviour over the past few years and found that shoppers can be split into two main categories: the planners, and the impulse buyers.
Those that spend time monitoring prices, waiting in the wings for items they need to go on discount, are the planners. These are people you can reach through your newsletters, and through tailored offers for attentive customers that may have purchased from you before. Their consideration period is often longer by the very nature of the consumer. So feel free to share more in-depth reasons for purchase around your brand and products.
Then we have the impulse buyers. The channels they monitor are news sites, listicles and social media. The conversion time is usually a lot quicker and they will look for the perceived value, and elements of immediacy like delivery.
Reasons for festive cheer
While the RBA news was undoubtedly a knock for most brands, there are still signs for optimism this holiday period. All of the traditional marketing considerations remain unchanged, such as understanding the mindset of your customer, and how and when to target them with appropriate messaging/deals – essentially the four Ps.
All of these factors have only solidified my belief that Christmas shoppers will be hunting bargains harder than ever this year. And earlier.
The festive period is about giving. So ensure your customers have a reason to visit you before the end of the year.
Taylor Fielding is the MD at TFM Digital
