BDO: Consumers Expect Holiday Deals Early and Often

The Black Friday creep has become a leap. By the time consumers are carving their turkeys, over one-third (34 percent) of retailers say they will have already run most of their holiday season promotions, according to a recent BDO USA survey of 100 retail CMOs.

With consumers beginning holiday shopping earlier and earlier, retailers are moving up their promotion timing accordingly. As these early November deals capture more of shoppers' limited holiday budgets before Thanksgiving Weekend, most retailers expect that Black Friday and Cyber Monday — while still important shopping days — will post only modest sales gains this year.

Overall, retailers forecast a 2.4 percent increase in Black Friday sales and a 3.9 percent increase in Cyber Monday sales. In fact, a vast majority of retailers forecast flat sales for both shopping days this year, though it's worth noting that the comparison is to 2013, when sales for both days surpassed expectations. Still, with major players such as Wal-Mart, Amazon and Office Depot having already launched promotions the weekend after Halloween, the need to differentiate with deals early and often is real. As Thanksgiving Weekend is downplayed due to more frequent promotions, it's no surprise that 64 percent of retailers say they will offer more discounts and promotions this year.

"By 2020, the official start to the holiday season may be in October," said Ted Vaughan, partner in the retail and consumer products practice at BDO USA, LLP. "Consumers now expect holiday promotions to come early and end late, and it's becoming increasingly challenging for retailers to provide attractive deals while preserving margins. Pulling out all the stops — from free shipping, to extended store hours, to deep discounting — often hurts bottom lines, but is necessary in order to survive in today's hyper competitive environment."

These findings are from the most recent edition of the BDO Retail Compass Survey of CMOs, which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country. The telephone survey was conducted in September and October of 2014.

Additional findings of the 2014 BDO Retail Compass Survey of CMOs include:

Retailers look to capitalize on increases in online orders. As consumers increasingly expect an omnichannel experience with consistent branding and pricing across sales channels, 36 percent of retailers say their promotional strategy is equally focused on stores and online. However, with holiday e-commerce sales expected to increase by double digits, according to forecasts from Forrester and Adobe, more retailers are homing in strategically on the online opportunity. This year, 19 percent say they will focus most of their promotions online, up from 13 percent in 2013.

Retailers are also keyed in on social media channels this year, with 34 percent of CMOs saying that they expect social media promotions will be their most successful online promotional tactic. Another 28 percent say that promoting free shipping will help them yield the most online sales this season. Many retailers, including Target, have already reduced or eliminated order minimums and extended the frequency of their free shipping offerings.

Doorbusters & in-store deals remain a key attraction. As Black Friday's average start time creeps further back into Thanksgiving Day, it's clear that retailers are vying to capture foot traffic in stores. This year, 67 percent of retailers say that exclusive in-store deals and discounts will be their top tactic to draw consumers to their stores and entice them to buy early in the season, when holiday budgets are still discretionary. Doorbusters and limited time products and promotions remain a key strategy for retailers, who know that if they can get shoppers in stores, the cart size may increase. Retailers will also focus on in-store events—cited by 17 percent of CMOs as their top tactic—to persuade shoppers to put down the device and come in person.

The BDO Retail Compass Survey of CMOs is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief marketing officers, using a telephone survey conducted within a scientifically-developed, pure random sample of the nation's retailers.
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