When is it too early to advertise Christmas products in store? Depending on who you ask, you’ll get very different answers. As self-proclaimed Christmas elves with a curated Spotify Christmas playlist, we understand that we are on the (very) early end of the spectrum. Yet even we have noticed that retailers appear to be decking the halls and increasing the play count for Mariah Carey’s ‘All I want for Christmas is You’, earlier each year. We’ve also noticed an increase in advertising f
tising for big sale events including Black Friday, Cyber Monday, Click Frenzy, and even Afterpay Day. Even before thinking about the specifics, the timing of these sales appears challenging for both retailers and consumers, not to mention supply chains. Heading into November are we meant to be planning for Christmas, or making the most of these big sales events (we’ll use ‘BFCM’ as shorthand to refer to these sales but we mean all the sales happening around this time of year)? Noticing these challenges, we teamed up with Associate Professor John Hopkins to explore how BFCM might be impacting Christmas, from supply chain to consumer behaviour. We recently sent out a survey to gauge how retailers are approaching BFCM and Christmas this year and have just started follow up in-depth interviews. We also dove into existing research around Christmas and big sales events, and while our results are not yet finalised, even our early findings highlight important insights for retailers to consider. So gather round the fire with an eggnog and let us tell you how BFCM just might actually be the nightmare before Christmas. Christmas retail and Black Friday The Christmas period is obviously quite crucial to retailers. The Australian Retailers Association and Roy Morgan predict Australians will spend $63.9 billion on Christmas this year, up 3% on last year. It’s also an important time for retail staff, with many retailers taking on additional Christmas workforces to keep up with demand. However, the emergence of BFCM, and the fact many of these sales are predominantly online, has impacted the Christmas period significantly. Consider this; last year retail sales in November rose 5.8% while online spend during the month increased 22.8%. Compare this to December of that year – sales dropped 4.4%, as did online sales. These figures also show how the balance of retail spending has crept earlier too. In 2001, sales in November accounted for 8.8% of the total for the year. Fast forward 20 years and this figure was 9.5%. This may not seem like a major percentage difference, but when talking about a $370 billion industry it means a shift of tens of billions of dollars moving earlier in the year. So, timing of when consumers are spending is subtly shifting, and this shift is accelerated by the increasing popularity of large pre-Christmas sales. The shift is not just in revenue though: BFCM are impacting retail planning cycles and even possibly the magic of Christmas. Christmas planning cycles The shift in retail spending also means retail planning and buying cycles are brought forward. In our pre-Christmas survey, around three-quarters of retailers told us they’ve had to start planning for Christmas 2022 earlier than previous years, and this has been a consistent trend. BFCM only accelerates this trend, forcing retailers to plan not only for the traditional Christmas period, but also the big sales that precede it. One of our interviewees highlighted the cyclical nature this could have on consumer behaviour. In their category, consumers have started searching for products earlier in the year, putting the pressure on retailers to have stock and messaging readier earlier. Yet promoting and stocking products earlier just leads consumers to start searching earlier, and so the cycle perpetuates. Other retailers though, particularly in e-commerce, even noted that this has shifted their strategic focus and planning from Christmas to BFCM as the main event for their category: one respondent referred to these sales as the “grand final for retail/e-commerce businesses”. If nothing else, BFCM has created a challenge for retailers to plan not only earlier, but for multiple overlapping key periods. There are also meaningful supply chain and distribution challenges to overcome. As the uncertainty of the pandemic drove panic buying in 2020, and the Ever Given ran aground blocking the Suez Canal in 2021, the critical nature of managing the supply chain was reaffirmed globally. Already this year Australia Post encouraged consumers to starting shopping for Christmas presents as early as September. An increased focus on BFCM only enhance these challenges for retailers and distribution partners. Think of it this way: if Christmas shopping needed to start months ago to be safely delivered, how will consumers go ordering online during the big sales? The magic of Christmas The challenges BFCM create for Christmas retail aren’t just practical, these sales could impact the very magic of the season. We know that environmental stimuli such as smell and sound have big impacts on consumer behaviour. Academic research on Christmas retail found when holiday scent and music in a retail store are congruent, it leads to more favourable evaluations by customers and higher intentions to visit. Think of scents of pine and cedar wood, combined with warming gingerbread and the dulcet tones of Michael Bublé, and you’re left with vivid images of Christmas and often positive emotions which lead to spending. The key here though is congruency: Christmas cues work when consumers are in the Christmas mood, but may not at other times of the year. So, while consumers are focused on BFCM rather than the holiday season, traditional Christmas cues online or instore will become incongruent and could actually become an annoyance rather than a positive experience. An extension of this is that BFCM risks shifting consumer behaviour from emotionally driven (or hedonic) shopping, towards more transactional (or utilitarian) shopping. For many consumers, Christmas is a highly emotional time where the shopping and gifting is overlaid with the desire to find the ‘perfect’ gift for special loved ones. Extensive research suggests this kind of emotional state often leads to higher spend and even compulsive buying. Contrast this to shopping during BFCM where the focus is almost entirely on price and bargain hunting. This type of transactional focus often leads to consumers spending less than they were willing to pay. For retailers this means that shifting the focus to BFCM may be putting consumers into less positive emotional states focused more on price. As one of our respondents pointed out, “the issue is that it also trains people to expect discounts and decreases the perceived value of the stock for the remainder of the year”. The second part of this quote is particularly important, frequent sales events can change how consumers view the ‘right’ price for a product. Multiple websites (e.g. Honey, and Camelcamelcamel) now track how the prices of products change throughout a year in response to these sales, highlighting how price-focused consumers have become in response. Beware the Grinch For retailers, the impact of BFCM and Christmas is challenging. On one hand, participating in these sales is a way to gain exposure and you may miss out if your competitors participate but you don’t. On the other hand, it might be killing the Christmas magic, encouraging consumers to bargain shop, and reducing the perceived value of your products. These dilemmas are important for each retailer to consider. While we don’t yet have clear answers for how to navigate these challenges, we will certainly share them when we do. Until then, think carefully about how (and even if) you’ll participate in BFCM, so as not to become your own Grinch. Dr John Hopkins also contributed to this article. He is an innovation fellow, and associate professor of supply chain and logistics management at Swinburne University of Technology.