This article is part of our Vogue Business Membership package. To enjoy unlimited access to Member-only reporting and insights, our NFT Tracker, Beauty Trend Tracker and TikTok Trend Tracker, weekly Technology, Beauty and Sustainability Edits and exclusive event invitations, sign up for Membership here.
For the canny luxury shopper, the savings on offer during this year’s Black Friday and Cyber Monday weekend (24-27 November) were substantial. Many of luxury’s biggest retailers — including Mytheresa, Net-a-Porter, Ssense and Browns — promoted discounts of up to 50 per cent.
Across all categories, retailer discount rates averaged 27 per cent globally, according to customer relationship management software company Salesforce. The US averaged 29 per cent, while Europe saw an average of 24 per cent. Globally, fashion and beauty led the fray: makeup saw the highest discounts globally at 39 per cent off, and apparel topped US markdowns at 38 per cent.
For luxury players, the navigation of this peak sales period is a balancing act. Compared to mass-market counterparts, luxury brands and retailers have to be exceptionally careful not to offer so many discounts that they dilute their positioning. They also don’t want to encourage shoppers to wait out the weeks before, saving their budgets for Black Friday bargains.
Experts say that for luxury brands, success during sales periods is about building a strong, year-round connection with customers and communicating the value of luxury pieces.
Top-end retailers outperformed overall sales growth by 1 to 2 percentage points over Black Friday weekend, according to Joe Shasteen, global manager of advanced analytics at shopper journey analytics platform RetailNext. That said, luxury apparel and handbags saw a softer-than-average performance in the run-up to Black Friday, according to Rob Garf, VP and GM at Salesforce.
Online is king
Ahead of the sales period, 64 per cent of luxury consumers reported that they planned to shop mostly, or only, online, according to Saks’s Luxury Pulse — up 15 percentage points on the year prior. “[These figures] suggest that [consumers are] confident in shopping online and receiving their orders on time,” says Emily Essner, CMO at Saks. “Given that the industry is not experiencing the same supply chain issues as were present last holiday season, consumers may be feeling less pressure to shop as early as previous seasons.”
This was borne out by the data. In-store Black Friday traffic in the US was up just 2 per cent year-on-year, according to analytics firm RetailNext — a slowing from 2022’s 7 per cent growth. Meanwhile, online sales were up 9 per cent.
Mobile traffic represented 82 per cent of purchases globally, according to Salesforce. Commerce platform Shopify, which powers luxury brand sites including Khaite, Mansur Gavriel and Ulla Johnson, reported a similar trend across its merchants: 74 per cent of sales occurred via mobile versus just 26 per cent via desktop, across the entire sales weekend (Black Friday through Cyber Monday).
Retailers made sure phone-friendly shoppers were aware of the discount flurry. Push, SMS and OTT (streaming) ads grew 54 per cent globally during the weekend, according to Salesforce data.
Online may be king, but there is still something to be said for the in-store luxury experience, experts agree. “While online sales have seen a surge, there remains a significant segment that values the in-store experience, especially for high-ticket items,” says Kate Hardcastle, London-based consumer expert and business advisor. “In-person shopping allows for a tactile experience — feeling the material, trying on the item and enjoying the luxury ambiance of the store.” Gen Z, in particular, are keen on in-store shopping. Some 54 per cent of Gen Z shoppers told youth culture agency Archrival that they were planning to shop in-store for Black Friday.
The convenience and product of online shopping means many luxury customers now opt for a hybrid shopping experience (browse online, shop in-store), Hardcastle says. Some 24 per cent of US Black Friday online shoppers bought online for in-store pickup, according to Salesforce.
“Consumers are less motivated to get in line at physical stores for doorbusters at 5am given the instant access they have online, particularly with their mobile phones,” Garf says. “Consumers on the go use their phones as the remote control for shopping over the holidays.” Shasteen also notes the positive impact on this trend of increasingly sophisticated retailers’ e-commerce and ‘bopis’ (buy online, pick up in-store) offerings as boosters for this trend.
The aspirational consumer returns
Aspirational customers, who are among those hit hardest by the cost of living crisis, have been cutting back on luxury spending over the past year or so. But, as expected, during this peak sales period, they have re-emerged to make the most of the deals.
Mytheresa, known for its curated ultra-luxury assortment and focus on the high-net-worth customer, had 24,000-plus items in its sale. Speaking on Cyber Monday, CEO Michael Kliger noted a spike in demand. “The aspirational customers do take that opportunity to buy what they did not for the past couple of months,” he said. “On the other hand, many customers had the opportunity to buy products and have been spoiled [by markdowns] almost [stretching] back to October in the US.”
That’s not to say aspirational customers are satisfied with whatever leftover inventory retailers offer them. “Aspirational customers, facing tighter budgets, often exhibit a more calculated approach during sales. While markdowns are attractive, there’s a growing tendency among these consumers to plan their purchases,” says Hardcastle. Some are still tempted to overspend, perhaps encouraged by “buy now, pay later” services, but Hardcastle says those shopping in the premium and luxury categories are “more likely to invest in classic, high-quality pieces that won’t go out of style quickly, rather than splurging on trendy items”.
Many consumers are feeling the squeeze. “Every shopper, including the luxury shopper, is feeling the constant increases in average selling prices over the last four quarters,” Garf says. “Even luxury shoppers were waiting out for deals this holiday season,” he adds, noting that sales fell an average of 7 per cent year-on-year globally in the first two weeks of November.
Luxury retailers remain wary of diluting their brand image and harming their year-round sales. “The whole industry is, of course, interested to achieve as high full price as possible — for the brands in terms of brand equity, and for us as a retailer in terms of profit pool, it’s the best strategy, so this is where everyone tries to maximise,” says Mytheresa’s Kliger. “But then it’s also a game of understanding where the industry is heading. It’s a challenge for us as a retailer if in certain geographies other retailers are already discounting, then we have to react.”
Kliger says markdown strategy is a detailed decision-making process. “We also look at our customer behaviour, because the last thing we want to do is teach our clients to become sale hungers — that’s our biggest fear,” he says. “We present to our clients that if you want the latest, you want the best, then buy it now, don’t wait as you run the risk of the product being sold out and of wearing the item when everyone else wears it.”
Hardcastle suggests that Black Friday offers retailers a powerful opportunity to reconnect with aspirational consumers. It’s about building a strong relationship with these customers, focusing on personalised experiences and exceptional customer service, she says. “By doing so, they encourage year-round loyalty, rather than reliance on sales periods.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
The discounting frenzy is in full swing. Who will come out on top?
