It may be a new year, but January presents retailers with the same old dilemma: How to navigate promoting new arrivals while catering to the bargain-hunting consumers looking for a deal?
Previous years have seen sales in the first month of the year drop as retailers pivot their strategies to communicate hot new styles. However, the ever-looming challenge of COVID has put January discounts back on the agenda.
This month remains critical to clear through dead stock and make way for new season arrivals. We’ve done an early market read to unearth how sales have carried over from 2021 and the trends retailers are offering in their latest product drops so far.
Have January sales fizzled out? Not quite. While deeper markdowns were taken ahead of the holidays, early bird shopping and supply chain disruptions encouraged retailers to discount a significantly greater proportion of their ranges post-Christmas to clear through old stock. This has carried into 2022, where over half of the products available online are advertised as discounted.
Less than a week into 2022 and the number of new arrivals has fallen by 27% YoY. Meanwhile, there’s been an increase of products discounted for the first time, especially in the UK where these styles eclipse fresh drops by 75%.
As forecasted by our Analyst team, nostalgic trends have prevailed within womenswear mass market arrivals. Y2K baby tees and wide-leg jeans have been a standout in 2022 collections so far. Menswear retailers have kicked off the new year with collegiate graphics, bomber jackets and dark color schemes.
As the month rolls on, retailers will turn their attention to promoting activewear, denim, lingerie and organizational home office goods.
Retailers are promoting newness over sale
Year-round discounts have become commonplace in retail, challenging the need for regimented promotional periods and sparking markdown addiction and fatigue. This has been accelerated by the pandemic, causing key sales events like Black Friday to struggle to reach their former heights. The new year serves as a clean slate for retailers to inspire customers with fresh styles, offsetting the previous months of red sales messaging.
Less than a week into 2022, this appeared to be the favored communication strategy. Analyzing emails from over 500 retailers spanning the US and UK through the EDITED Visual Merchandising function reveals the word "new" was used 15% more than the word "sale." More tellingly the use of “sale” dropped 23% YoY, further indication that retailers have pivoted away from marketing January as a clearout period. However, the data tells a different story.
Emails from Intermix & boohoo
How did festive sales shape up?
Discounts remained high carrying over from Cyber Month, with US retailers offering more competitive markdowns than seen on Black Friday to clear out stock before the new year. Throughout December and January, the average discount depth in the US didn’t fall below 48%, with the steepest reduction of 52% taken on December 21st. In the UK, the most prominent markdowns were also taken pre-Christmas. Since Boxing Day, US discount depths have plateaued at 50%, while the UK has shifted up and down one percentage point before stabilizing at 40%.
Looking at the proportion of products reduced shows a clear upwards trajectory of the amount within ranges reduced post-Christmas. Both ranges peaked at the end of 2021 with 69% of assortments marked down in the US and 67% in the UK. This indicates despite the new products being added to sales, the majority of markdowns in 2022 extended from the festive season and end of year sales.
What's new in 2022?
Tops make up the bulk of new arrivals across both regions, with retailers backing nostalgic-infused items like shrunken baby tees, collegiate graphics, crop-tops and cut-out details.
There is a greater investment in dresses at US retailers at 17% of the total assortment vs. 13% in the UK. Relaxed-fit denim continued to land in both regions with new wide-leg styles at Bershka, split-hems at PrettyLittleThing and straight-leg jeans at Zara. Statement outerwear was noted through bright puffers and fuzzy textures.
Excluding black and white, neutrals were 16% of arrivals in both regions, supporting investment in minimalism within knitwear and outerwear drops. Competing generational hues, green was backed over pink by UK retailers with Kelly green statement trousers and slinky sage dresses. In the US, pink reigned supreme driven by new activewear and sweaters.
Blues sat within the top three colors arriving at the start of January, due to new denim trickling into the market. This hue equaled 12% in US assortments and 17% in the UK. Pantone’s 2022 Color of the Year, Very Peri has yet to see a mass uptake. However, boohoo and Nasty Gal are poised as early adopters, including purple in their early 2022 collections.
The EDITED Market Intelligence Platform pinpoints the core colors retailers are investing in by using image recognition technology. Reach out to see it in action.
Americana prep is making a strong statement for 2022 with new varsity graphic tees and sporting tracksuits landing in ranges. Complementing the theme, accessories make up 17% of arrivals in the US with new caps arriving at PUMA and adidas. Comfort continues to be a focal point of denim with loose jeans arriving at Mango and ultra-stretch properties at Uniqlo.
There’s a greater investment in outerwear in the UK, which is 9% of newness and consists of bombers, checked shackets and Gorpcore-inspired puffers.
Grey equals 21% and 20% of US and UK menswear in 2022, respectively. US retailers then put a greater emphasis on green, through khaki hoodies and sweatpants. Navies proved a popular choice in both regions for gym gear, while neutrals are becoming more commonplace in the UK and favored for checkered shirts and loungewear.
What will retailers be talking about this month?
As consumers return to the daily grind, homeware retailers have focused on promoting smart organizational solutions for every room, from desk supplies to stacking glass containers. Denim fit guides and category-specific emails have been communicated by Banana Republic and Anthropologie to compliment new season drops. As Valentine’s Day approaches, lingerie will emerge as the most-talked-about category.
Though a proven year-round essential, January is the go-to month for activewear promotions. Recently, Nordstrom pushed a self-care angle, encouraging customers to exercise to feel their best, while Mr. Porter advertised new workout gear for motivation. Stay tuned for next week’s blog where we break down this successful market in more detail.
Mr Porter Email UK - Jan 2, 2022
For EDITED users, we round up the key promotional messages each day so you know the top stories ahead of your marketing meetings. Look out for the Daily Tracker – Visual Merchandising in our Retail Reports.
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