Jason Pallant: A lot of people don't want to be doing this, but we're competing with each other, trying to one up each other with bigger and bigger sales.
[Voiceover]: Let's push customers into a utilitarian mindset and that really transactional based leverage the sales. But then how can we kind of flip the switch on that to then enjoy Christmas and you know, really drive those more hedonic purchases?
Jason Pallant: We're not saying don't offer discounts, right? I think what we're trying to say is be strategic about what you're doing with it.
[Voiceover]: Welcome to ADD to cart, Australia's leading e commerce podcast that express delivers all you need to know in the fast moving world of online retail. Here's your host, Bushy.
Nathan Bush: How are we feeling as the silly sales season approaches? We know it's always a busy time for retailers, but what else is going on in the minds of merchants in the run up to Christmas? Excitement. Panic. Strategy? Anxiety. My guests today are very, very excited about Christmas, but they're not retailers. They're actually academics and they offer some unique insights into how we can all do sales better. Jason and Jessica Pallant are the his and hers of marketing research, a dream team husband and wife package whose academic take on e commerce provides much needed clarity and and a fresh perspective. Their recently published paper, aptly titled the Nightmare Before Christmas. They're really putting the sparkle into academic research, aren't they? It delves into how brands feel about taking on Black Friday, Cyber Monday, pre Christmas the lot. They asked a bunch of retailers and industry leaders to spill the beans on their approaches to the sales in an attempt to work out how to change the race to the bottom for everyone's benefit. Today we discuss the key findings from their research, the practical solutions they recommend for retailers who want sales success and we also hear their top tip for standing out during the festive season. If you want to take a look at the research yourself, you can download the Nightmare Before Christmas, the Research, not the Movie from the Add to Cart website.
Nathan Bush: We will have a link in the show notes and on the blog post.
Nathan Bush: So thanks to our partners Shopify plus and Signet. Here's our conversation with Jason Pallant from RMIT University and Jess Pallant from Swinburne University of Technology. Dr. Jayes, welcome to Add to Cart.
Jason Pallant: Thank you. Thank you for having us.
[Voiceover]: Yeah, excited to be here.
Nathan Bush: Excited to have you both here.
Nathan Bush: We've got Jase and Jess. I've known you guys for a little while now. I'm excited to share some of the recent research that you've been doing. But before we do, I. I want to understand a little bit more about your family unit, obviously, husband and wife combo here. I understand that the precursor to what we're going to discuss today is because you're a little Christmas obsessed. Is that right? What does Christmas look like in the Plant household?
Jason Pallant: So I want to start with a clarification here, mate. I married into this, right? So this is as a family. Yes. Our identity is as Christmas fanatics.
Nathan Bush: Right.
Jason Pallant: We're known as that among our friendship group. But I'm putting out there that I'm married into it and I play my part. It was not originated from me.
[Voiceover]: Yes. Look, I will own that. I am the huge Christmas fan. I say, last year, look, we had our Christmas tree up in October last year, and I say that it was because our son asked to put it up. I was not fighting him on that at all.
Nathan Bush: Where does this come from? Where does his passion for Christmas come from?
[Voiceover]: You know what? I think that it traces that. I spent Christmas in Canada when I was 6, so I had the beautiful, perfect white Christmas. And as an Australian, that has just, like, been a core memory. So I reckon it was, you know, that Christmas when I was six has just set it for me.
Nathan Bush: Do all the other kids, you know, around your kids now go, you've got your Christmas tree up in October. Like, are you then raising the bar? Are you the people that put the lights up and do the big decoration in the street? And everyone goes, oh, I suppose I should do something then.
[Voiceover]: Yeah. Look, we already have Christmas lights up,
Jason Pallant: so you can take them down. We thought we were going to be those people, right? We're in a little bit of a court and we put our bits up. We're like, we moved into a new house, so we're like, we can finally put some decorations up. We went sort of modest on it and then one day we're just driving up our street and at the end of our street, when I tell you every tree they had had lights, they had the entire front done. And we're like, we are in the right street for us. This is where we were meant to. And so, yes, we are sort of those people, but, like, there's still, you know, people who do it a lot better than us. But, you know, we're definitely on that path.
Nathan Bush: So you're upping your game this year?
[Voiceover]: Oh, definitely. And I've got a hot tip for everyone as well is that we super into the family matching Christmas jammies. But the best thing to do, you Buy them on the Boxing Day sales the year before so that not only you get them cheap, but then the next year everyone's wearing the current season so you stand out and you look different.
Nathan Bush: Yeah, that's nice. We are also that family, but we try and buy ours a little bit bigger. So they last for two years. Oh, yeah, that's mainly for me.
Nathan Bush: We try and get two years out
Nathan Bush: of them, but then we don't know what Christmas is, what Christmas. But that's okay. All right. We are here to talk about a paper as academics that you have co authored together. We're going to get into that doing a paper together as husband and wife. Couldn't think of anything worse. But co authoring a paper called the Nightmare Before Christmas with a big question mark at the end of that statement. Tell us, as retailers in 2023, are we facing a nightmare this Christmas?
[Voiceover]: Yeah, look, this is an interesting one. So the kind of title for this research was purely born out of the fact that I wanted to title an academic study the Nightmare Before Christmas. So nightmare might be a bit of an exaggeration, but what we have actually found through talk about what this might look like is there are some really interesting, challenging aspects that retailers are actually navigating around this space. And particularly with, as you know, Black Friday, Cyber Monday, and all these sales are actually kind of gaining traction and particularly taking off in Australia. Really. Black Friday was really only kind of popular in Australia around 2017. So that exponential growth was kind of a really interesting area that we wanted to dive into.
Jason Pallant: Yeah. To build on that. Right. It started out as a Christmas passion project. Right. There's one of the nice things of being academics is we get a bit of autonomy over what we research. Right. Like, the two of us always try to make everything we do pretty industry relevant. But we were like, even just personally we'd seen, like, retailers just advertising Christmas earlier and earlier. Right. Christmas stuff going up. And that just has, like, sparked an idea of, like, well, we love it because we're in for Christmas, but is that, like, do they need to be doing that? Like, what's the pros and cons of it? And in trying to answer that question, actually what we've leaned into and found is that a lot of the reason for that, but the more potentially more interesting thing is really around these big sales, right, your Black Fridays just over Mondays. And so the idea there of where sort of some of the nightmare, if you will, all those challenges, like some of it is there's some external factors that retailers are really Facing right. Cost of living pressures, consumers trying to buy things earlier, plan all this kind of stuff at the same time. What we found from some of these interviews is there's a little bit of some self fulfilling prophecy here where retailers are admitting that they're doing some stuff they don't necessarily want to be doing and that they say, actually this might not be a good thing for us in the long term, yet we feel like we have to do it now. And so that's where we actually leaned into this idea of. That's where some of the nightmare comes. It's like, well, how do you actually do this? How do you participate in these events without making it worse for yourself down the track?
Nathan Bush: And I assume you had to pitch this to someone at the university. You guys are at different universities. I assume you had to pitch this to someone. What was the reaction when you said, we want to do a Christmas paper.
[Voiceover]: I'll take this one, Jo. So we were at the same university when we started this. But the best thing about academic research is that we don't. We can run with this because it is industry relevant and it is related to the areas that we study. So yeah, the best bit about that is that we didn't really have to get buy in before we started the project.
Jason Pallant: We'll clarify. We do have to follow formal ethics approvals if any university people are asked that we definitely did get proper ethics clearances.
[Voiceover]: We did, we did.
Jason Pallant: But that's more about like, we weren't asking people super sensitive information or anything. We weren't asking people to like relive past Christmas traumas or whatever.
Nathan Bush: Can we do a separate paper with that in it though?
Jason Pallant: We could, yeah, I think that's. We could make a movie out of that too, right? Yes.
[Voiceover]: Ethics might be harder for that one.
Jason Pallant: So yeah, so there's a bit of like, were you doing some Christmas research? That's interesting. But once you sort of dive into it and go, well, actually what we're looking at here is at its core, this is research about how retailers communicate to shoppers around discount and sales events. That's the core thing here with a bundling around Christmas and Black Friday, all of those kind of events.
Nathan Bush: Okay, so before we get into the outcomes or the insights that comes out of that report, can you share the process of how you gathered the data and who you spoke to along the way?
[Voiceover]: Yeah, so again, we did have ethics clearance for this. So part of ethics is we can't kind of identify the participants. So it was all, you know, confidential in who we spoke to. But in terms of, we can kind of give rough indications of, you know, there were senior retailers, people who have been working in industry and have that kind of wealth of experience. We were talking to consultants and industry bodies as well because we really wanted to get kind of a holistic perspective rather than just talking to, okay, we're talking to these small retailers over here. We really wanted to get a good picture across the board of how does this actually play out within Australia from a broad perspective.
Jason Pallant: And yeah, so we're fortunate that we've got pretty decent retail networks, particularly across, you know, Anz, through, you know, writing for Inside Retail, being part of judging panels, doing events, connecting to yourself, et cetera. So we put like a direct call out to people that were like, that person will have some really great views because they're at a particular retailer or they're, they're part of an association. We also put a bit of a public call out that just said, you know, if any, any retailers, anybody connected to retail wants to give us our, our views on this. So to Jess's point, right, we can't name people, but people who participated are very welcome to name themselves if they want to out themselves and point to it here, later, wherever. But, yeah, we can't do it. But the people who did participate, very welcome to do so.
Nathan Bush: Great.
Nathan Bush: And are we talking just in depth
Nathan Bush: conversations rather than surveys or anything like that? How many?
Jason Pallant: Yeah, so we had 12 people. We treated them a bit like sort of in depth case studies, if you will. Right. So we're talking to the senior leaders, decision makers, we're sitting with them. And again, part of the benefit of it being anonymous is we could get into a bit of the strategic stuff without having to play the party line. So, you know, it's like, you'll never be quoted as saying this, but tell me, like, what's internally going on when you approach a Black Friday or a Cyber Monday or a Boxing Day? Like, are you excited about it? Are you upset about it? Where's your strategy come from? Who's pushing you to do more? Who's pushing you to do less? We could get into all of those kind of really detailed conversations because people knew we weren't going to come out and say, blah, blah, retailer has said their CFO is an idiot because they're trying to do this or that.
[Voiceover]: Right. To clarify, no one called anyone an idiot in the transcript I was about to say.
Nathan Bush: Can we just, just share that one?
[Voiceover]: Just one look after this, we ended up with, I think over 120 pages of transcript that we went through line by line to really look at what these people are saying and what's happening.
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Nathan Bush: What I loved is that you've developed a whole new term out of this. You've called it. While we normally say Black Friday Cyber Monday, shortened to bfcm, very catchy acronym, you've actually called this sales period the Pre Christmas mega sales PCMs. Just non catchy as BFCM.
Jason Pallant: Rolls off the tongue, doesn't it? Yeah, yeah.
Nathan Bush: We are so good at acronyms here, aren't we? But Pre Christmas mega sales PCMs tell us around why you went down creating a whole new term rather than sticking to the traditional bfcm. Yeah, I'm like I'm grossing myself out by using those acronyms.
Jason Pallant: But yeah, I'm with you. So there's a few things there, right. So one is the, the academic ego. We just love to come up with new things sometimes make it more complicated, make it more abstract. So there's, you know, there's that factor. Right. But I think like a bit more seriously. Right. So I mentioned before that at its core, what we're actually looking at here is how do retailers decide how they're going to participate or not in different sort of big sales events.
Nathan Bush: Right.
Jason Pallant: And so deliberately we didn't want to limit it to those specific events like Black Friday Sub Monday is such a focus. Right. But it's just that there's sort of almost a newish now still phenomenon. Right. Been a few years, but it's like they're not been forever. And at the same time there might be new ones next year, the year after. And so what we wanted to do here is not just look at the specific Black Friday event or even that one weekend, but more generally look at how are retailers approaching sales that sort of fall close to that traditional Christmas period and all of the opportunities, but also challenges that that face. Right. And even think about, you know, we've got Click Frenzy. We've got, you know, singles day, we've got after payday. Now like we, it's a sort of, we're trying to branch it out as, as not limiting it just to those two events even though they are, you know, the bulk of pre Christmas mega sales.
Nathan Bush: So we're kind of talking that whole Q2 sales period from October through to Boxing Day in December.
[Voiceover]: Yeah, absolutely. And I think, and that's a very kind of industry framed answer that Jay's got as well. But there's also kind of an academic reason driving this as well, other than, you know, just, just our egos is that to get this published academically. You know, we've had papers published in nine days. We've had other papers take three years. And so we wanted this research to be enduring. And so again, as Jay said, if there are new sales that come up, you know, next year, year after or even in, you know, kind of five years time, we want people to still be able to get the relevance out of this research kind of into the future as well. So if it takes us three years to get published, it's still relevant.
Nathan Bush: Makes a lot of sense and it's something that you can build upon then, I suppose.
Jason Pallant: Yeah, totally. And I think we'll get to that. I would dive into that. But like all sort of good research, I think it tells you some things but it really raises a whole lot of more interesting questions and that's what we sort of love diving down those rabbit holes of. Oh, that's a really interesting thing this raised. Let's go and explore that next.
Nathan Bush: Great.
Nathan Bush: So tell me, let's get into the findings. What were the most interesting findings for you that would be relevant to our listeners who are either owning their own businesses or working in retail and might be planning or putting the finishing touches on their peak season sales right now? What came out of this research that was interesting?
Jason Pallant: Yeah, so I think one of the biggest things that I guess surprised us and coming a little bit externally from retailers, but we were just looking across the industry seeing how much discussion there was around these sales, particularly those Black Friday Cyber Monday kind of events. And I guess our assumption was like, you know, retailers love these events, right? They're so excited about Black Friday, they don't care about Christmas anymore. And being Christmas fans were like, oh no, this, you know, don't forget about Christmas.
[Voiceover]: Right.
Jason Pallant: Well, I think what was really interesting is that is true for quite a few retailers is this we heard in there where there's some retailers where it's like their grand final. It's like everything points to this, particularly you sort of pure plays or your emerging retailers where it's such an opportunity to gain new customers, build brand awareness, all that kind of stuff, right? But the majority of what we heard, particularly from your sort of multichannel omnichannel retailers or more established brands, it's almost like this, this sort of underlying, really negative feelings around some of these events of like we heard things around reluctance, we heard even fear, right? We heard people talking about, I don't want to participate, but I feel like I have to. We heard people talk about things like, we've got ourselves hooked on this discount drug. Of the bump that I get if I offer a 70% discount. It feels great because my sales go up, my visits go up, my numbers go up. But three months later I've actually realized I've lost a bunch of money. But they've almost become hooked on that feeling of the numbers, the short term numbers going up. I think that was our really big, interesting overarching theme here, is that all these retailers are sort of going into these events being like, well, we have to, everybody's doing it, it's blah. But actually if you talk to each other, it's like, well, a lot of people don't want to be doing this, but we're competing with each other, trying to one up each other with bigger and bigger sales. Is that actually good for individual retailers? Is it even good for the industry? Is it good for consumers? I think there's a real opportunity here to sort of sit back and go, why are we doing this if a lot of people are not actually super psyched about offering 70% site wide discounts?
Nathan Bush: Is it a case of there's no way and you've got to be very careful around. I'm going to have to find the word collaborating on pricing. But is it a case of now with Amazon having such a strong presence in Australia, other international retailers having such a good foothold here, where they're going to do it regardless, there is, the horse is bolted. There's no way you can kind of go, guys, let's just simmer this fire down a little bit. Like they're going hard, they're going after market share. Australian retailers, if you want a piece of that pie, it's there. There's no getting around it now.
Jason Pallant: Yeah, I think so. I think this is the challenge that we heard right. There's a really fine balance here. And this is where some of that fear and some of that FOMO we talked about came in where a lot of retailers are doing it. They're going, well, Amazon's going to do it and if we don't, we're going to lose that market share, we're going to lose customers, we're going to lose that opportunity. And there's absolutely an element there of like, I think you're right, like the horses bolted. You can't. It's very hard for a lot of retailers to not participate.
[Voiceover]: Right.
Jason Pallant: You'd have to, you have to be in a really strong position to be like, no, we don't do this. I think what we saw is a lot of retailers are then almost trying to go at your Amazons, your big players head on and go, well, Amazon's offering 40% off all of their tech. We're going to offer 45% off all of our tech, try to beat them, like. And this is where we talked about this idea of this race to the bottom. You do that, Amazon's just going to put it at 50% because they can do that. Right.
Nathan Bush: They've got deeper pockets.
Jason Pallant: They've got way deeper pockets. Right. So I think there's not many Australian retailers that are going to win that battle or even should want to participate in that battle, because if you start doing that, then consumers go, well, the product's actually worth half of what you were selling it for. Right. There's a whole lot of complexities there. So I think part of what we're trying to do here is highlight that of, do you really need to be chasing, fighting Amazon, trying to chase that? Yes. You've got to sort of participate. You can't miss out on that opportunity. Don't lose your customers. But are there different ways of maintaining your margins, maintaining your brand perception and participate in a way that you're not fighting someone who can lose 50% on all their products just to gain market share.
Nathan Bush: Great. And Jace, I want to come back in a moment to some of the tactics that you've uncovered that might be alternatives to that, that bulk discounting.
Nathan Bush: Jess, for you, what was some of
Nathan Bush: the most interest findings to come out of the research?
[Voiceover]: Yeah, and I think Jase kind of summarized it really nicely, but it was this whole kind of idea of fomo. It's been so well researched as a consumer emotion and saying retailers use FOMO to get consumers in and to go, hey, this is a limited time product, you can only buy it now. So it's just interesting that that as a concept was coming through for retailers as well. So it was really interesting to kind of Identify that. Well, we know that this is a consumer kind of social factor, but it's having almost the same effect on the other side as well. So for me that was a really interesting kind of concept to come out of it. And the other one for me that we're going to dive in more in terms of. I think it'll come up more later. But the idea of this kind of almost your Christmas admin and your Christmas joy and so how we can actually use these sales to get, get our Christmas admin done, tick off our shopping list, get everything out of the way so that when it comes to Christmas
Nathan Bush: we can like enjoy it more from a customer's perspective.
[Voiceover]: I mean from both, from, from everyone. I mean we've all as retailers, I'm sure, you know, they've got their admin list to tick off and shopping present list to buy for as well. So yeah, absolutely. Using the opportunity to go, okay, well our sales here, you know, let's push customers into a utilitarian mindset and that really transactional based leverage the sales. But then how can we kind of flip the switch on that to then enjoy Christmas and really drive those more hedonic purchases where we are going to see that value increase for customers at that later stage as well?
Nathan Bush: Yeah, great. One of the quotes that stood out
Nathan Bush: for me and you don't kind of
Nathan Bush: get these quotes that often in academic papers and there is a language warning here was we fucked it for ourselves, we fucked it for retailers by training the consumer to wait for, for sales. Really interested in coming off that point from you, Jess, around the ticking items off the list, getting ahead of the game in terms of doing the Christmas shopping? I think the context is even more different in 2023 given the economic climate. Do you feel that this year we've fucked it even more because customers don't have that much money and they've been conditioned to go, why would you buy it now when you've got less money than ever? Why would you buy it in June, July, August, September, you know the sales are coming. Do we expect that this Black Friday will unlock wallets?
[Voiceover]: That's really interesting. And you know this quote, when we heard it, we almost changed the title of the paper to this quote, but we thought we wouldn't necessarily get away with publishing offensive words in an academic study.
Nathan Bush: The elf that fucked Christmas.
[Voiceover]: Yeah, basically. And it's really interesting that you kind of say like, are consumers going to wait for the sales? We literally had this discussion last week, so we need to buy a bed for our daughter, she's, she's growing out of her cot. And I just went, oh, well, look, we're almost at the end of September, what's waiting another month to see if it goes on sale. So we have literally played this out going, what's another month? You know, she is not, you know, climbing out of the cot yet. We can wait for that sale so
Nathan Bush: she can sleep outside for a bit.
[Voiceover]: She can, she's got the dog bed, it's fine. I wouldn't, would not do her that. But yes, it's interesting to see that if through this and with the cost of living up, are we just going to see consumers delaying their spending, you know, from the months of September, October through to this sales period, but equally bringing that December spending forward again? And we can already see, if you look at the ABs stats over the past kind of 10, even 20 years, we can see that that December spend is already shifting into November. And so I think, I wonder if we're just going to see more of that as we kind of really dive in and leverage these sales because, you know, we kind of have to because everything is more expensive. Child care phrase their costs three times this year already. So we're certainly feeling it as well.
Nathan Bush: It's an interesting point because even though
Nathan Bush: your paper has Christmas in the title, the sales aren't always gifting related, right? We're in the same boat. We need a new tv. We've got a whole bunch of people coming over for the grand final on the weekend and we've got a TV that has spots and all sorts of stuff on it. And I'm like, we really should get a new tv. I'm like, what's another month? We'll get a good bargain. So it's really important for us as retailers to think about it's not just the gifting side of it, it's all the household purchases and especially the big purchases, the beds, the TVs, all that sort of stuff that people have put on hold knowing that there's going to be an opportunity to get more value for money at this time of year.
Jason Pallant: And this is one of the really interesting, not debates, but bits we got into with retailers where I think one of these big questions is, yes, it opens wallets, right? So throughout this event, consumers are going to spend a whole bunch of money, right? A bunch of people are going to buy a bunch of stuff. Our sort of question, what we're trying to figure out, it's very hard to sort of quantify this, right, but is going, were people going to buy that thing anyway. And if there wasn't on sale, they would have bought it for full price because they need it. We need a kid's bed. Like the. And the value of a kid's bed to us, you know, is high. Right. But given we know there's an opportunity for that exact same thing, and it's probably likely that we'll get that or something very similar for 30% less in a month, why would we not do that? Right? And that's the very difficult place that we find ourselves in. Like, it's. If it's generating new sales from new customers. Like, if I'm, because of Black Friday, buying a TV that I hadn't really planned, but I'm like, oh, I'm convinced to buy a new style, right? Good for the retailers. If I was going to buy a TV all year and I've just watched, waited until now and bought it for cheaper than I would have anyway, that's an opportunity cost loss. I could have sold that TV for full price. But because I have trained consumers that I'm going to offer it to them at 40% off pretty soon, then I've just lost 40%. Right. And that's part of the context of this quote. And academically we talk about this, this concept of a reference price, right? Which is what people sort of think a thing is worth, and then a thing is a bargain if it's less than that or more than that. The issue with this sort of continual discounting and where these quotes getting to is we've taught consumers that our products are worth less than we sell them for because we've taught them that we're going to give it to them for half price, 40% off multiple times a year. So. So why would a consumer ever buy something at a full price unless they have like an immediate, I must get it today because, you know, if the bed breaks, okay, fine. But what percentage of consumers are in that position? I think a lot of them are in a position where for a lot of stuff, particularly what we see on Black Friday can wait.
Nathan Bush: Well, it's the question of am I
Nathan Bush: getting a bargain in these two months or am I getting ripped off for the other ten? Exactly.
Jason Pallant: Yeah, totally. It's a good way to put it.
Nathan Bush: I want to talk about some of the behaviors and strategies that you're seeing or hearing about retailers take on to kind of preserve margin, but also get their share of the wallet. During this time, we just spoke to Emilio, who's the head of paid media at Muscle Nation, one of Emilio's strategies, and this is a tactic from more of a micro level is that when he's looking at doing paid media at that time using some of Facebook's features, which allows him to set limits on the amount of new customers that can see their campaigns around sales periods. So saying, hey, I want 90% of our engagement on these ads to be from existing customers rather than shouting it to potential customers, hoping that potential customers go through their usual purchase path and maybe skip the sales along the way. What other tactics or strategies are you foreseeing that retailers will take in either this year or the upcoming years to preserve those margins and get that share?
[Voiceover]: That's really interesting. I mean and to kind of tie into this, an interesting one we've seen is almost the anti Black Friday and the anti sales strategies just to try and cut through the noise of hey, this is 40% off, 50% off, 60% off going, actually we're not participating at all because that is a different message that is being sent to consumers. So it's kind of almost like you're more likely to pay attention to it because it's different. So I don't know if it was, if it was last year or a few years ago. So Allbirds actually raised their prices by a dollar and said here, pay an extra dollar but we'll then donate all of that extra proceeds to charity. So it was a way of actively not participating and cutting through with a different message than just hey, we're on sale by this huge amount as well.
Nathan Bush: Do you think? And we've seen that happen over the last couple of years, people who are like companies and with the best intentions to go out like the Allbirds or to say, hey, we'll use this to rather than give you a discount, we'll donate 10% or whatever it is obviously gets the headlines, especially in our industry world. Do you think it actually moves the needle?
Jason Pallant: And I guess it depends on. I think there's a really interesting thing of what needle are we trying to move. Right. Because and that's what we heard. This is sort of part of this idea of the discount drug, part of what we're seeing where there's so much so a lot of retailers focusing on top line revenue sales during the period. Right. But there's a whole lot of other stuff going on here around awareness, brand perception, price perception, value perceptions. Right. So I think what we're sort of saying, right, and we're not going to tell any retailer don't do this, do this because it's going to be different Right. There's a place for retailers to go. All right, we're going to use this, we're going to offer the discounts, but we're using it on the stock we need to clear out of the warehouse because that's costing us money. You know, there's all sorts of. We're not saying don't offer discounts. Right. I think what we're trying to say is be strategic about what you're doing with it. So for that example, right, maybe that doesn't move the needle on revenue within that immediate time period, but does that create a longer perception of a, of a premium brand? Does it create a perception of a brand that has values that are going to align with customers for a longer term period? Right. Because this is the other thing around offering a discount and acquiring those customers at a discount. You've now acquired them at that lower price point. How many of those people are actually going to then go on to become full price, repeat purchases later? Right. If you've got the data that says that they do. All power to you. Happy days. You've done super well. I think a lot of times we're saying, you know, you get the one and done. Right. We sold this new customer. We've got an email address. What are you actually. What's the lifetime value of that person that you've acquired?
Nathan Bush: Yeah, it's an expensive time to do brand activity though.
Jason Pallant: Yeah, it is.
[Voiceover]: So. So yeah, this was a really interesting. We, we heard this from a lot of participants of like you were, you were mentioning Facebook ads before. But a lot of stuff we heard from our participants was the cost to do targeted like, you know, Google, Facebook, all of those ads is just huge at this time because everybody is trying to send out those messages to get the new customers in for their sales. So not only are you then discounting your products, you've actually got an increased marketing spend to kind of balance with that as well.
Nathan Bush: Yeah.
Jason Pallant: So to your question earlier, bushy about tactics, one of the ones I saw last year I thought was really interesting and I would be interested to say I don't know how successful this was, but pretty sure it was Andy Lee and the Wodlife did a. They may have done some discounting as well, but I remember seeing some stuff where for Black Friday what they did was a, an exclusive range. Right. It was like superhero themed. It's like. So our offer, right. Our participation in the event is whether they discounted or not. Apologies, I don't remember. But it's sort of, it's not that we're offering you 70% off everything. It's that we're going to attract you in with something you're only going to be able to get for this time period. So still playing on that scarcity, still playing on that consumer fomo. But rather than it being you're missing out on a 40% discount, it's like you're missing out on this awesome Superman training. Top that. After Black Friday, it's gone.
Nathan Bush: Yep.
Jason Pallant: Right. Or it's probably going to sell out. So I think there's. That's where we're sort of going of like, think about what's the strategy. That's not a price discount. That is maintaining the brand still getting interest. We know that the wallets are open, get them to come to you, but you don't necessarily have to chase the bigger and bigger price discount to do so.
Nathan Bush: It's the calm before the storm. And unlike George Clooney in the Perfect Storm, spoiler alert. Shopify wants retailers to come out not just alive, but through thriving, because it's a big deal, especially here in Australia. Last year, Australian merchants ranked third globally in Black Friday Cyber Monday sales volume. What an opportunity. So if you want to maximize your share of the peak sales this year, use this time before the storm to download and read Shopify's peak season playbook. They've got 10 experts, including me, to share their tips on how to maximize sales at this time. So put on your life jacket and get your hands on Shopify's free peak season playbook. Download it at shopify.com/forward/guides, forward/peaksalesseason2023 or just
Nathan Bush: follow the links in the episode show notes from the device. You are on Land ahoy. Yeah, I think product is key. Right? So product planning. If peak sales or PCMS isn't part of the product planning process, then you're going to miss out regardless of how good your marketing or your discounting is. I think especially, you know, what we just talked about is holding out for those bargains. I think it's going to be really key to make sure that you don't just throw everything out there at once. It's like being selective around, hey, great, we're overstocked of this. Or this is an older range. Let's go with that first. And then we might introduce this, and then we might introduce this. So it kind of keeps customers guessing as to what's coming. It doesn't become predictable.
Jason Pallant: Yeah. And this is a really interesting one where there was a fine line here around Doing that, getting that excitement. But also not what we heard with some people talking about almost non genuine participation. So we heard some discussion of like, and this is one of those funny things where then it's easy to say other people are doing that, but what we're doing is genuine. Right. But part of that was a bit of like a bit of some of retailers sort of going, all right, this is our discount. But then it's like, oh, we haven't done so well. So on day three, we're now upping everything by 10%. The risk of that is consumers who bought on those first days feel cheated. They're going to come back to you and be like, hang on, you told me it was 30% off. The next day it was 40% off. I want the extra 10%. Right. But I like your thing there of, of that underlying idea of having a very clear plan of what are we offering? And to your point earlier, maybe that's tailored to different kinds of customers. Maybe we're saying, you know, it's not a blanket, anybody can get 40% off, it's our loyalty members or we've seen you've bought from us. So what we're going to do is offer you a renewal of whatever your thing is or that we're actually using that now as a customer relationship building, loyalty building play, not just how many people can we get clicking our website and make as much noise?
Nathan Bush: Yeah, I think that's really, really good point, Jace, because there's two battles here. There's the battle for share of voice because it is the loudest time in retail. Right. Everyone's literally got like one of those stands. You remember those microphones outside of the Dr. Jewelry stores with everyone, that guy would rock up with his little speaker box and his microphone. You've got hundreds of retailers shouting at you with those speaker boxes going, come
[Voiceover]: here, come here, come here.
Nathan Bush: And then you've also got the battle for the wallet. So you've actually got to be really interesting with your messaging rather than those boring percent off, you know, that will just become wallpaper. How do you become interesting with your messaging that this is exclusive or this is a bargain for members or this is why we're doing this discount. You've got to create a story around it too.
[Voiceover]: I think think it's interesting you mentioned kind of share of wallet because I think this is one of the factors that was kind of almost scaring retailers into going early with non genuine offers of going, well, if I don't go early and my competitors do, they're going to buy from my competitors and I don't, I don't get any of that, that share of wallet for my customers. And so almost by that fear and going, okay, well my retail, my competitor's done it, I've got to do it too. My offer's not as good as it could be. I'm not cutting through that noise and you end up worse off anyway because you've reduce those margins. And so this is why taking that really considered planned approach and working out okay, but what is the value you're offering customers to encourage them to shop with you over your competitors rather than just doing a bigger discount earlier out of fear.
Nathan Bush: So Jess, we're recording this on the 28th of September. Black Friday this year is on the 24th of November, so a little bit later than last year. Can I ask you both give us a date? When do you reckon we're going to start seeing PCMS really hit its straps? How early are we going this year?
[Voiceover]: This is interesting. Look, I think retailers who are smart about it will be signaling to their customers kind of their intent and what value and offers they are going to be offering probably in the weeks leading up to it, but not, not really pulling that trigger until either the week of or the day of. And I think that is probably going to be the best approach. But of course we know in this space there are brands who are just going to dive into that fear and pull the trigger early just so that they can be the first ones off the rack. So I think probably like at least in the week or two leading up to the 24th, we'll definitely be seeing sales picking up if they haven't already
Nathan Bush: started earlier with a bit of a tease period in there rather than just pulling the trigger straight into sales.
Jason Pallant: Yeah, we heard some really interesting quotes. Right. In terms of. And this is why again, we went away from using just the prec Friday Cyber Monday term and termed at least pre Christmas mega sales. Because some retailers are looking at it as like it's just sales month. November, we're just on sale. Right. Maybe even into October. Right. And again, that's part of what we're trying to. For some retailers that might work. Right. Again, we're not telling retailers don't do that. What we're trying to do from this is start a conversation of going that mindset of we're just on sale for all of November. Is that actually the best thing for you, your customers, the industry as a whole?
Nathan Bush: Right.
Jason Pallant: Is there a way to Jess's point, right. Signaling what's coming? Get people excited, an exclusive range, something happening. Watch this space for loyalty members. Start getting that share of voice, get people interested. But do you need to be 40% off on the 1st of November and then just give people a month to buy stuff cheaply? Yeah, I would. That's the bit that we're sort of really trying to question.
Nathan Bush: Yeah, that makes sense. Makes sense. And in terms of performance this year, we've talked about the waiting and there feels like there is that anticipation and holding off to purchase, but at the same time, we're still not in a great economy. I think disposable income is a lot lower than it was last year. How do you think, if I was to ask you, do we think we'll be up, down, equal on last year's PCMs? What's your prediction for this year?
Jason Pallant: So, mate, you've asked to primarily academics to make a very clear, practical answer to a complex question. Right?
Nathan Bush: I see where we're going here.
Jason Pallant: Yeah. So there's some back and forwards that we can put to this. So let us work through it and then we'll give you something that looks like an answer. Right, So I think you made a good point that there's those challenges. At the same time, we had some challenges last year and we had record sales. Right. I think it was the Australian retail association of something 8, 0.6 ish percent up. Unprecedented, all of those kind of things. Right. We're predicting flat. It goes up 8.6%. We sort of go. Recent history does that. That's a point to the argument for going to grow again, right?
[Voiceover]: Yes, it is. But interest rates have continued to rise, inflation still rising. We're kind of seeing the effects more of that. So I think there was a stat out of the UK that even just last year, the cost to consumers of this time period, so not even just the money that they're spending, but the costs that they're facing is up 65%. So is that going to factor into it as well?
Jason Pallant: Which is also a good point. And so to support that point. Right. Are you having fun with this? Pushy. This is.
Nathan Bush: I'm loving this. I can see how this report comes together now.
Jason Pallant: Yeah. This is our academic. You're getting a real insight into academic work. Right. So the point to that is, if we look at Singles Day last year, it was the first year, I think they didn't release the results publicly. Every other year they've gone, look how successful it was.
[Voiceover]: Right.
Jason Pallant: And so the estimates from some external consultants go, it is actually a plateau.
[Voiceover]: Right.
Jason Pallant: It's the first time ever it wasn't a growth. Which again, if we apply that logic, we're going, okay, we're starting to see slowing. Maybe we are, maybe we're flat.
[Voiceover]: Yeah. But then if you do consider cost of living and then the other side to that argument, so if you kind of consider people have as much disposable income to be spending on these things, taking advantage of these heavy discounting is actually potentially attractive. So particularly if retailers are going to continue down the heavy discounting path at this time, we might see consumers taking advantage of that.
Jason Pallant: So conflicting things, right. Cost of living pressures, but at the same time people wanting to get discounts because of those things. People have been waiting so stagnant, but also lots of people interested. It's. This is why it's a complex question to answer.
Nathan Bush: Right?
[Voiceover]: It is. And I think back to our earlier point of, you know, we're waiting to buy the bed because we're like what's waiting another month? So yeah, are we just going to see the August, September, October purchases being delayed until these sales in November. But equally all of your Christmas shopping, are you going to be brought forward? So you're not going to be spending in December either.
Jason Pallant: So that's a very long winded answer away to give you our answer.
Nathan Bush: So up, flat or equal?
Jason Pallant: Okay.
Nathan Bush: Oh, sorry.
Nathan Bush: Up, flat or down?
Jason Pallant: Yeah, the period itself, those days, Black Friday, Cyber Monday, those periods top line revenue up because people have been waiting and need those discounts. We're buying our bed, you're buying your tv. Cost of living pressures have made people stop spending and then going to put it all in the discounts. But caveat to this is if we then actually look across the quarter. Right. Like you said, that's where I reckon we're going to see the pre and the post periods like be shrunk and it's just been sucked into these couple of sales. Right. So to answer your question in a very long, roundabout, academic way, those four days up, the whole period stagnant or down, because what we're doing is actually just selling stuff at a discount during a very select period. How is that?
Nathan Bush: No, that's great. You've actually given me an answer. That's fantastic. So we're saying that we think it will be up during those key sale periods, but they'll essentially be cannibalizing from the dates around them at a lower margin.
Jason Pallant: You said it a much quicker way than we did, but that's my prediction. I'll put that One on. But we've given you the complexity and the logic behind it and the way
Nathan Bush: you work through it together. That's amazing. Tell me more about this process. Tell me more about how you guys work together. Is there inside gossip? Who's the easiest to work with when writing a paper like this?
Jason Pallant: I reckon that really depends who you ask and in what context.
Nathan Bush: Okay, so who's got the strengths and the weaknesses? Who's good at what?
[Voiceover]: Well, we have been described as the competence and the confidence. So we'll let you assess who is who in that.
Nathan Bush: Okay, so I'm going competence with you, Jess. Confidence with you, Jase. Am I right?
Jason Pallant: Yeah, you've hit it. I'm the stereotypical 30something white guy that likes the sound of his own voice. Right.
Nathan Bush: And you're talking to someone who hosts
Jason Pallant: a podcast and me too, up until recently. Right. So, yes, no, but I think this is why we actually enjoy working together. Like, so I certainly enjoy it, is that I think we do balance each other.
Nathan Bush: Well, I was just shaking her head then.
Jason Pallant: I know. Got a very strange reaction there. She's like, I'll tell you the real story later. But yeah, I think it's like any great, you know, great teams, right? You need strengths and you need your strengths and if you can combine it. So I'm a bit more big picture. Jess is a bit more detailed. I'm a bit more on the sort of analytics. Jess is a bit more creative. We put all those things together, we end up with research using Christmas puns, but hopefully giving some benefit back to the industry.
Nathan Bush: Now, Jess, I want to end with a question about Christmas because that's where we started about your love of Christmas. And we've turned it into a conversation. Conversation around share of wallet, margins, all that sort of retail stuff. Do you feel. Do you have a fear from. You know, we've got beautiful John Lewis ads that we got used to at this time of year. You know, the Maya displays that seem to have been kind of coming away and becoming less of a draw card, even visiting Santa in malls. I think Covid took a bit of a hit there. Are you worried that retail is losing the spirit of Christmas?
[Voiceover]: Look, I'm not. Or as I certainly hope they aren't. And that was what I was trying to get to. One of my favorite things that came out of this research was the idea that we're actually just finding a way to separate our Christmas admin from our Christmas joy. And so existing research tells us there's huge economic value to doing this. So if we consider like when sight and sound are congruent. So when they match kind of logically in our heads, like consumers are in a better mood, they're more likely to spend money. And this is a huge thing at Christmas time when we've got all of those smells in the store, you know, you're thinking of your like mahogany and teak wood and your pine and your gingerbread and then you overlay, you know, your Mariah Carey, Michael Buble. Like consumers are actually put into a hedonic mindset and they are more likely to enjoy that kind of shopping experience. So I think there is potentially an opportunity for retailers to strategically go, okay, in your pcms, we're pushing you utilitarian, just get it all done to then actually really enjoying, you know, this kind of hedonic point of time and really just signaling to customers that you've got the time to enjoy it because you've done all of your admin and got that out of the way.
Nathan Bush: Your eyes lit up when you said Michael Buble and Mariah Carey.
[Voiceover]: I actually am not a Mariah Carey fan. Michael Buble. Yes. No one Mariah Carey fan.
Nathan Bush: Great. Now, if people want to access the paper, what's the best way for them to go about it?
Jason Pallant: I think we're going to share it, we're going to post it, we can put a link to it with. Alongside this episode, we're both on LinkedIn and I think that the point of why we're doing this is try to have some conversations, right? And it's like we're not telling people we've got the answer. We don't have a six week course on the fundamentals of Black Friday marketing to sell. We're just trying to really get people thinking, discussing. We want to hear feedback. We want people to come and tell us like, you've missed the mark on this because then we go, great. Where do we fit in those other views? That is the whole research process that we are on.
Nathan Bush: Right.
Jason Pallant: So LinkedIn, I'm on Twitter sometimes email us. We're very, very happy to come in chat to, you know, retail specifically. We're happy to share any of these findings in any kind of forum that's, you know, what we do.
Nathan Bush: Great. Jess Chase, thank you so much. I hope you have both have a
Nathan Bush: brilliant Christmas and your daughter gets a new bed.
[Voiceover]: Yeah, she really hopes so too.
Nathan Bush: There you go. Have they changed your view of academic academics? Certainly has for me. Academics who love retail can translate it into our world and who genuinely get excited about Christmas. How good Was that all right? The three takeouts that I took from the conversation with Jess and Jason Number one Share of Voice it's the other game in peak season, there's two games we're playing at peak the Share of Voice game and the Share of Wallet. We typically focus on the share of wallet, however, they don't have to be mutually inclusive. You don't have to play both games. You can choose one or the other. You might be able to get share of voice in this peak shopping season without actually having to give away loads of margin. With some creative thinking, selective products and community engagement. Keep in mind things like giveaways, special product releases, all the things that are above and beyond where you make the
Nathan Bush: bulk of your sales.
Nathan Bush: Keep in mind though, there's not a louder or more expensive time to get share a voice than peak season. Number two Revel in the build up. Much like Jess's excitement over Christmas, the anticipation of a bargain is sometimes as good as the bargain itself. When it comes to your peak sales, make sure you are including teasers, hints, content, early access, even as part of your marketing plan. Peak sales don't start when the promotion date starts. Get the most value out of them in the builder. And number three, consider the game you're playing. I think one of the most interesting insights that Jason and Jess got out of their research was almost a lamenting from retailers about what they've created. They've created a beast for themselves. If you find yourself dreading the increased promotional or discounting expectations at this time of year, it might might be time to take a step back to think about whether this is the type of activity that you want to be a part of this year, next year, in five years time. It's hard to take away once you
Nathan Bush: get on a roll.
Nathan Bush: Thanks for joining us today on Add to Cart to listen to all our e commerce conversations now in the hundreds. You can head on over to addtocart.com there you can also join up to our free private Slack community to share e commerce ideas, tips and questions with other listeners. You can also subscribe to the Add to Cart weekly newsletter and browse some of the video highlights from our chats. There is a lot there that's add to cart.com au and if I can ask you one thing before you go. If you enjoyed today's episode, make sure you share it with a friend or a colleague who could benefit or leave us a review. It really makes a difference. Thanks again for listening and until next time, keep those customers adding to cartoon.
