Peak shopping season is fast approaching, and with increasing financial pressure causing many consumers to tighten their pockets, it could prove to be a tough period for retailers.
While discounted prices and sales are a possible solution to keep shoppers spending, a new report by Dressipi showed a dip in the biggest occasion for this, Black Friday.
The e-commerce personalisation platform said in a report that it had analysed data in order to help retailers prepare for the big day, however its research found that the event, which lands on November 25 this year, was becoming less popular among consumers.
According to its study, in 2019, the Black Friday period contributed an average of nine percent of the annual revenue for a retailer, with a revenue growth of 73 percent when compared to the prior two weeks.
In 2020, this number had already seen a decline to 5.82 percent in annual revenue and fell again a year later to 5.18 percent.
The report cited a number of possible factors that could have contributed to this decline, such as a higher frequency of sales by retailers looking to push unwanted stock or sustainability factors that push consumers to make more conscious decisions.
New customers are less profitable
Dressipi also said that it had found an average decrease in return rates over Black Friday of 17.14 percent, which it noted was likely due to the most bought items being accessories – a category that already has low return rates.
Bags, for example, have a typical return rate of 7.22 percent, while items like dresses are returned at an average rate of 49 percent.
Among all of its data, Dressipi also questioned how valuable Black Friday customers actually were, noting that they typically consist of around 12.5 percent new customers.
The platform’s evidence, however, found that these customers are potentially less valuable than more loyal ones, as they are 10 percent less likely to make a purchase again.
Additionally, new customers are less likely to come back, resulting in a median yearly revenue that is 4.8 percent lower than that of repeat customers.
Dressipi suggested that promotions for new customers should be focused on higher-margin products, while existing customers should be given broader promotions in a bid to increase order frequency.