What fashion brands need to know about holiday shopping

The holiday shopping season kicked off earlier this year 

Deloitte’s “Holiday Retail Survey” indicates that 38% of shoppers are likely to start holiday shopping earlier this year than last. Between the fear of not getting gifts delivered on time due to supply chain disruptions and the fear that economic conditions are only going to worsen, consumers kicked off their holiday shopping earlier this year. But what does this mean for retailers and their discounting strategies?  

Numerous brands have also stated that they will start discounting up to two weeks earlier this year, with big retailers such as Amazon and Walmart launching their holiday sales as early as the first weeks of October. So how can retailers keep up with the shift in consumer behavior this holiday season?  

Real-time date from the leading automated competitive analysis platform, Retviews, allows brands to stay ahead of the curve and track exactly when their competitors started discounting, how much of their collection they discounted and at what rate.  

Retviews’ data show a peak in the share of discounted items in September and October, standing at 42% and 40%, respectively – significantly higher than the same time period in 2021. Zooming in on Retviews data shows that in 2022, brands are discounting large portions of their collections earlier this year, rather than waiting for Black Friday to kick off the holiday shopping season.  

Although the share of discounted items remained relatively stable between September and November in 2021, this year is a different story. There have already been two discount peaks, in September and October with November likely to also exhibit a peak as Black Friday rolls around. Leading brands in the US market (such as Aritzia, Abercrombie & Fitch, GAP, Target, Zara, Old Navy, Banana Republic, Uniqlo and American Eagle – among others) are getting ahead of the usual seasonal sales. An example of brands discounting earlier in the year is Mango, which launched its “mid-season sale” on the 28th of September in 2022, two weeks earlier than in the previous year which was launched on the 13th of October. 

An automated benchmarking tool is key for a fashion brand, especially during discount season. This year, getting the right strategy is more crucial than ever. Retviews’ real-time data allows brands to track exactly when competitors are launching discounts, so that they can launch their own discounts quicker than ever and avoid missing out on the early holiday shopping wave. 

Increased spending on gifts 

As stated by PWC’s “Holiday Spending Statistics” this year shoppers are increasing their spending on gifts and experiences. Gen X and Millennials, who are expected to spend the most this holiday season, will spend more on gifts for family and friends rather than buying things for personal use.  

Compared to last year, not only are brands releasing their holiday collections and sales earlier this year, but their gift guides are also being launched earlier than before.  

Taking a closer look at Retviews’ data showed that in addition to launching its Gift Guide 4 days earlier this year than in 2021, J. Crew also launched its holiday discounts one month earlier this year.  

Vince is one of the brands with the most striking difference YoY, as it launched its gift guide and holiday collection two weeks earlier than in 2021. Moreover, US brand Victoria’s Secret not only launched holiday promotions and gift guides earlier this year, the first one starting on October 13th, but they also launched a Cyber Monday event on the 11th of October. 

Thanks to Retviews’ data, today’s hottest brands are keeping track of competitors’ newsletters and promotional activities, in order to set the best marketing strategy for their brand.  

Where are retailers increasing their prices? 

This year, higher prices and inflation are top of mind for holiday shoppers, as nearly three quarters of the sample analyzed by Deloitte expect higher prices compared to last year. Regardless of the rising costs and low levels of confidence, the NFR states that retail sales in 2022 are expected to increase between 6% and 8% over 2021.  

The future remains bright for luxury during the holidays, as shoppers with an annual income of more than $120,000 plan to spend 15% more than last year, allowing luxury players to comfortably increase prices without risking significant losses.  

Compared to last year, US brands’ average prices have increased from $54 to $67, which represents a 24% YoY increase. However, different categories also mean different pricing strategies.  

Keeping “dopamine dressing” in mind and the return to the office after two years of pandemic-induced restrictions, brands are increasing their prices more for formal categories than casualwear, as shown by Retviews’ data.  

A sound strategy for fashion brands, as research shows that there is a steady demand for formal clothing, as shoppers are willing to pay full price for dressy pieces and cutback on loungewear, explaining price hikes in dresses, high heels, suits and loafers.   

Retviews’ real-time data allows brands to identify exactly how competitors are increasing prices and in which category, making pinpointing the ideal pricing strategy in a time of inflation and recession a breeze.  

Aggressive markdowns due to unsold stock 

Retailers found themselves with unsold stock due to supply chain disruptions and consumer spending cutbacks in the first half of 2022. With high amounts of inventory, brands are now seemingly hiking up discounts to eliminate what’s left from past seasons.  

As inventory is piling up, brands are rallying to find the best strategy to maintain profits, whilst eliminating unsold goods. Leading brands such as Aritzia, Abercrombie & Fitch, GAP, Target, Zara, Old Navy, Banana Republic, Uniqlo and American Eagle (among others), are discounting a higher share of their collections this year, specifically 29% more YoY. As shown by Retviews graph, brands are not only discounting larger portions of their collection but are also doing so at a higher rate. The average discount rate for these same brands also increased this year, by 23% YoY.  

As shown by Retviews data, brands are lowering the amount of their collection that is not on sale, witnessing a -11% decrease YoY. The biggest difference for the US market is in the 50%-60% range, as brands are discounting significantly higher portions of their collection at 50-60% in 2022, than in 2021. For the market as a whole, this was an 84% increase.  

In 2022, Abercrombie & Fitch and Aritzia both increased the share of their collection discounted at more than 50%, additionally for Aritzia, five times more items were on sale for the discounting range of 50%-60% in 2022 (YoY). Zooming in on Abercrombie & Fitch, they went from not having any items on sale for over 50% in 2021, to 4% of their collection being 50% to 60% off in 2022.  

As inventory is piling up, brands are rallying to find the best strategy to maintain profits, whilst eliminating unsold goods. Retviews, the automated market intelligence platform for fashion allows brands to get ahead of the holiday season and find the ideal way to stay on top, with the most competitive discounting strategy, whilst minimizing margin loss. 

Which category are retailers discounting the most? 

There has been a steady demand for formal clothing and back to work apparel, and shoppers are cutting back on casualwear. As these shifts in consumer behavior directly affect retailers as well as their pricing and discount strategies, pinpointing the most effective strategy is crucial. Are brand discounts currently reflecting the industry shift? What’s the right discount mix for retailers?  

As shown by Retviews data, sweatpants, leggings, and t-shirts are the categories have the strongest discount rate, clearly reflecting shoppers’ willingness to spend on dressier clothing rather than on casualwear.  

Overall, suits are one of the categories with the smallest discount rate, confirming the popularity of back-to-work attire and party collections. Furthermore, dress markdowns are only high for casual and summer dresses, which retailers weren’t previously able to discount. 

Succeeding in this challenging period  

As consumer behavior is shifting, there is no replacement for data-backed insight when you have to tackle one of the biggest shopping events of the year. Leading brands are trusting Retviews to study the competitive landscape and make data-based decisions faster. Thanks to Retviews data, your brand will be able to track competitors’ discounting strategies in a matter of several clicks, and know exactly where, when and by how much to discount, so as to preserve margins.