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Singles' Day vs Black Friday: Which is the Bigger Opportunity for Fashion?

 

Chinese e-commerce giant Alibaba expects to log its highest ever number of daily transactions on its two shopping platforms, Tmall and Taobao, this Friday, on what is set to be the biggest ever iteration of its annual shopping festival Singles' Day. More than 600 million transactions are expected to take place on November 11 as part of the one-day event, during which Alibaba deploys the kind of cut-price discounts that, last year, helped the company drive more than $14 billion in sales — significantly more than the $10 billion generated by the Black Friday shopping event in the United States.

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This year, Alibaba is upping the ante with a shopping extravaganza that will include an eight-hour fashion show in Shanghai, during which viewers will be able to pre-order items off the catwalk; virtual reality shopping experiences; and a performance from Katy Perry. More than 30,000 brands, including Coach and Michael Kors, are expected to take part in Singles' Day, which began as an unofficial holiday in the early 1990s by students as a day to celebrate being single by treating themselves. The shopping event was seen as the antithesis of Valentine's Day and Alibaba tapped the holiday in 2009 as a promotional tool, turning it into an online sales bonanza that now eclipses Black Friday and Cyber Monday combined.

“This year, we are expecting merchants from over 25 countries to participate, including big brands such as Apple, Topshop, Lancôme and Nike” says Meifang Chen, senior manager at Alibaba Group UK. “The number of international brands taking part increases every year and that’s something we don’t expect to slow down, quite the opposite, ” she adds, noting the demand for high-quality foreign products from China’s growing consumer class.

In previous years, the event only existed in mainland China, though this year Alibaba is extending Singles' Day to Hong Kong and Taiwan and plans to roll out the event across South-East Asia and beyond next year.

“I think the relevance [of Singles' Day] in Asia is going to continue to skyrocket,” says Tiffany Hogan, senior analyst at Kantar Retail. “I wouldn’t be surprised if we see it creeping into Europe… I do anticipate that it will have a moment, and I think that moment will come here. I just don’t know what the size of it will look like yet.”

Black Friday is an occasion that has very low growth now, it’s becoming a bit less popular.

Many global fashion brands have been slow to exploit the growing Singles' Day opportunity however, favouring Black Friday, which takes place on the Friday after Thanksgiving and kicks off the holiday shopping season.

“Black Friday marks the beginning of the big shopping season in the United States,” explains Hogan. “From a retailer’s perspective, the participation in a big holiday … [It] gives the retailer a strong share of the markets and makes shoppers aware they are participating in this, and vying for their dollars. So in not participating in that, you can lose out on that share of mind, and the opportunity to connect with the shopper when they are willing to spend money and go into a store and come out with something in their hand versus just going into browse.”

Black Friday is America's biggest retail sales day of the year, named because it is traditionally the day when many retailers cross over into profitability for the year, going from ‘red’ to ‘black.’ But the power of the event is waning, as retailers have started discounting product earlier in the year and moving their promotions online to coincide with opportunities like Cyber Monday, in a bid to prolong consumer spending over the holiday season.

“The problem with Black Friday is threefold, explains Neil Saunders, managing director of Columino, a retail research agency and consulting firm. “The first one is that most retailers now discount all year round, so as the discounts have gotten sharper, Black Friday just doesn’t have that pull because people say well, I can go in the next day and the day after … So there isn’t really the appeal there once was,” he says.

“The other issue is that people can do a lot of shopping from home online, so you don’t need to have to have a special day to pull people into stores,” he continues. “And the third thing is that Christmas has come early now as it has in most countries. People start buying things for Christmas gifts for discounts during Black Friday, which means that retailers end up pulling forward sales they would have otherwise made and they made them at a lower margin.”

Last year, overall sales for Black Friday dropped by 1.5 percent on flat customer traffic, while average spending per shopper fell by 1.4 percent, according to data from analytics firm RetailNext. Singles' Day in comparison, broke its own record for sales in 2015, reporting a 60 percent increase year-on-year and logging 278 million orders from shoppers.

The opportunity to participate in Singles' Day is something more fashion brands should be aware of, particularly as they face challenging conditions in Western markets, like slowing demand and a backlash against events like Black Friday from consumers who have grown weary of constant promotions and discounting over the past few years.

“I’m amazed at how few brands really understand the international calendar of events and the power of the international market,” says Marshal Cohen, retail analyst at the NPD Group. “They all recognise that this is where growth is going to come from for them but they don’t necessarily take the time to recognise how they tap into it.

“Singles' Day represents a bigger opportunity because people aren’t that familiar with it,” he continues. “Brands haven’t necessarily maximised out their international reach, so from a growth perspective, a brand would be well suited to understand what Singles' Day is, play into that younger generation’s ability to spend money and make a festive occasion out of it and turn it into an opportunity.”

When you look at Singles' Day, it’s still a very high growth occasion that is building, year in, year out.

It’s a view Saunders shares. “When you look at Singles' Day, it’s still a very high growth occasion that is building, year in, year out,” says Saunders. “Obviously that is very lucrative and it’s very attractive for retailers. By comparison, Black Friday is almost the complete opposite. It’s an occasion that has very low growth now, it’s becoming a bit less popular … It isn’t really as lucrative for retailers as it once was.”

But deciding which opportunity proves best for retailers and brands, depends on their geographical location, argues Hogan, who notes that for many US retailers, a domestic shopping event could still be the better choice for further growth. “It is so geographical and it comes down to how people are viewing growth,” says Hogan. “It makes sense for retailers to participate [in Singles' Day], and brands even, if they want to grow in China.”

But with Alibaba moving into new markets next year, Cohen believes this will soon change. “[Singles' Day] will continue to become bigger and stronger and well known,” says Cohen. “Retail is a funny animal. Success of any size will bring in all kinds of people who are going to emulate it. So if this is remotely successful for just a few brands in one year, in two more years after that, there will be a cluster of brands that are jumping all over it.

“Retail is manifested with all kinds of businesses that when they find something that works for someone else, they jump all over it” he adds. “So the answer is yes, if this becomes remotely successful and even sounds opportunistic, they will get in on the game.”

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