‘Tis the season to be shopping, and retailers around the world have been gearing up for what is still the most important time of the year for shoppers – the holidays. While Black Friday and Cyber Monday usually kick off the official holiday season, we’ve seen many retailers start as early as the beginning of November to capture more market share sooner and stay ahead of the curve.
But Cyber Week still reigns supreme for shoppers as the year’s most important shopping weekend. This year, SAP Commerce Cloud powered over US$8.3 billion in digital commerce gross merchandise value (GMV) for Cyber Week. Specifically, our retail customers saw a 22.3% increase in average order value (AOV) year over year.
The National Retail Federation (NRF) is predicting 6% to 8% growth in sales compared with the same period last year, which is significantly lower than the 13% growth the year prior. We believe some of that growth can be attributed to inflation, which was at 7.7% as of late October.
Inflation – coupled with a looming recession – has affected shopper spending habits, but not in the ways most people would expect. Many insiders and analysts predicted that shoppers would be buying less and paying more, but with retailers sitting on lots of inventory this season, deals and promotions have been plentiful. In addition, shoppers aren’t necessarily shopping less, but instead spreading out their purchases by buying earlier. To help with cash flow, many shoppers are dipping into savings, relying on credit cards, or taking advantage of buy-now-pay-later options at checkout to be sure that they can still make the holidays work for themselves and their loved ones.
Shoppers Are Looking for Deals and Promotions
These spending trends are reflected in shoppers’ online behaviors as well, evidenced by movement in site traffic. For Black Friday, overall site traffic for SAP Commerce Cloud customers increased 23% versus last year. For these same customers on Cyber Monday, overall site traffic increased 53%.
In addition to site traffic, retail customers leveraging SAP Commerce Cloud saw Black Friday conversion rates of 3.4 times more versus last year, as well as Cyber Monday conversion rates 2.9 times more versus last year.
What’s more impressive are the site traffic metrics and conversion rates when we zoom in on our business-to-consumer (B2C) retail customers running sales events, which show that shoppers are actively looking for deals and will buy if the deals are attractive enough. Black Friday traffic for retailers running SAP Commerce Cloud that executed sales events was 33% higher year over year, versus a 16% increase for the total data set. Conversion rates during these events were even more impressive, with an explosive 209% higher year over year for those that ran them, compared to a 4% increase for the total data set. On Cyber Monday, traffic for retailers running sales events using SAP Commerce Cloud was 58% higher year over year, versus a 40% increase for the total data set. Conversion rates were similarly great, coming in at 382% higher year over year for those that ran sales events, compared to 5% less year over year for the whole data set.
What to Expect and Key Recommendations for Brands
EMarketer’s Insider Intelligence predicts the remainder of the season will grow at 7%, and with the current consumer confidence index at 96.5, it’s hard to say if spending will persist throughout the rest of the holiday shopping season into the new year.
Despite the current uncertainty, retailers can stay agile to cater to shoppers’ needs, meeting and exceeding their expectations while responding to dynamic market conditions. Having the right levers to pull at any time is key to successful holiday sales growth, so they should leverage their technology to monitor changing shopping behaviors and identify and convert on growth opportunities by quickly adding new touchpoints and experiences. Finally, they can ensure the last-mile journey for shoppers is frictionless by ensuring inventory levels will meet demand and fulfillment is not backlogged, ultimately avoiding the dreaded post-holiday returns that can eat into the growth they worked so hard for.
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All data presented here is approximate and is based on various assumptions. All data is unaudited and is subject to adjustment. All financial figures are in USD. Data represents online and offline sales made by SAP global merchants.