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While forecasting helps businesses make better business decisions, for Black Friday 2021, this is challenging with a host of factors impacting planning that are different from last year.
Why it matters
Traditionally retailers would base this year’s Black Friday forecast on what happened in 2020. But the unique circumstances last year, ongoing economic uncertainties, and the seismic shift that have taken place over the previous 18 months make accurate forecasting difficult. For brands, making key decisions around products and marketing is harder.
Deeper dive – what’s impacting forecasting?
This year four factors are making forecasting challenging. These are:
The changing retail landscape: While Black Friday 2021 is an online and offline experience, the volume of store closures – 11,000 in 2020 alone – means many stores that would have supported a multi-channel Black Friday push aren’t there anymore. At the same time, shopping behaviours have permanently changed. The shift to online shopping is accelerating, with some commentators predicting online sales will make up almost a third of overall retail spending by the end of the year.
Supply chain challenges: Raw material shortages and global supply bottlenecks are pushing up prices and leading to concerns around product availability. The increased demand and competition for workers and a lack of drivers could mean warehouse and delivery staff issues, putting a strain on retailers at a crucial time.
The state of household finances: While some have saved over the lockdowns, others have been hit hard by job losses and reduced incomes, impacting the willingness to spend. Uncertainty is making savers be more cautious: they are preferring to build up their savings rather than spend in case the economic situation changes again.
The importance of Christmas 2021. Last year Christmas was a non-event. This year people’s focus and spending maybe around the Christmas period itself, rather than Black Friday, with 55% of consumers planning to make Christmas the biggest celebration.
The bottom line
Today’s challenges are not only making forecasting more difficult but transforming the nature of Black Friday itself this year. But while forecasting is difficult, we have learned from 2020 that planning is essential, even in times of uncertainty. Focusing on the wider peak season, building promotions linked to stock levels, avoiding blanket wide discounts, using targeted promotions, and setting customer expectations can help alleviate some of the forecasting pressures linked to these factors.
How should retailers be approaching Black Friday? Download our report to understand the different Black Friday retailer types and the strategies each should adopt for a successful Black Friday.
