Is January newness combatting retail’s discounting hangover?
Following a discount heavy 2020, how are retailers kicking off the new year?
National lockdowns and ever-rising COVID cases spilling into 2021 may have dampened consumers’ hopes for a more optimistic year. However, retailers are kicking off their communication strategies to inspire a fresh start. Discover how retailers are balancing newness with January sales.
This month is critical to clear through dead stock and make way for new season arrivals. January sales are still one of the strongest communicated themes amidst “new year, new wardrobe” emails. Keep reading to find out how much of these sales have carried over from 2020 and what trends retailers are offering in their latest product drops so far.
Since the 2008 Global Financial Crisis (GFC), year-round discounts have become commonplace in retail, removing the need for regimented promotional periods and sparking markdown addiction and fatigue. This was even more apparent in 2020, where EDITED confirmed discounting reached Black Friday levels as early as May to cope with the pandemic’s economic fallout.
With the new year kicking off, many retailers communicated a “clean slate” and advertised new products to serve as a much-needed palate cleanser from months of red sales messaging. In less than a week into 2021, 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 17% more than the word “sale.”
How did festive sales shape up?
Continuing on from November’s epic Cyber Month, advertised discounts remained high throughout December across both analyzed regions. The day-by-day analysis of online data reveals the average discount depth in the US didn’t fall below 40%, with the heftiest reductions taking place post-Christmas. In contrast, UK mass retailers didn’t reduce as deeply and took their most prominent markdowns earlier in December to help boost Christmas shopping.
Analyzing the proportion of products marked down shows a different story. At its most competitive, 83% of products online were reduced in the UK on Boxing Day while the US never exceeded 70%, highlighting its opposing strategy of discounting fewer products but at a higher percentage. As US retailers begin January trade, the proportion of reduced products start to drop as discounting is pulled back. However, tougher lockdown rules in the UK means the closure of non-essential retail once more, forcing businesses to extend their festive discounts online to drive sales.
The split between sales and newness
Despite a positive approach in communications, the shadow of 2020 still lingers over retailers as they use this time to clear stale merchandise piled up from last year. There are fewer products reduced for the first time this January than last across both markets, revealing most of what retailers promote in their 2021 sales is the same stock reduced on Boxing Day.
There is also less newness in the market now. COVID-19 caused fast fashion to slow down, a theme that continues to prevail in retailers’ 2021 sustainability efforts. This is noted across both regions’ early January drops, with the number of new styles significantly declining YoY. While arrivals are down in the US by 46% YoY, they exceed the number of products first discounted for this time by 33%, showing pockets of optimism with consumer demand for newness.
The uncertainty in the UK will further spark frugality in consumer spending on new season fashion. This is already apparent as the region focuses on reductions, with first discounts outpacing newness by 38%. The data also indicates new season arrivals have made less of a splash in this market than in the US. Of the new styles delivered in 2021, 46% have already been advertised as reduced – meaning retailers are marking down freshly introduced items to help move them as we enter lockdown 3.0.
What does 2021 newness look like?
Pandemic hero categories weren’t left in 2020. Sweatpants made up between 27%-30% of new bottom arrivals across both regions. An influx of tracksuit sets arrived from boohooMAN, giving longevity to loungewear with the velour options ticking the Y2K trend. T-shirts were the most-invested top style, yet slightly more shirts were delivered in the UK compared to hoodies. Low-ticket items such as socks were of note across the UK, while hats, bags and belts saw accessories make up 10% of newness in the US.
Excluding black and white, grey has been the most popular color for 2021 apparel arrivals so far. The US leaned more in favor of neutrals and purple popped as a fashion color in the UK. Green was a strong investment across both markets with the UK favoring khaki hues, complimenting utility and streetwear looks, while a richer palette of forest green and olive hues was backed by US retailers.
Waist-up dressing prevailed with an emphasis on comfort in the US, where T-shirts and tanks are currently the most-invested styles. UK retailers delivered sweaters and trousers with slouchy and wide-leg cuts the defining silhouette of the latter. In contrast, Loft and American Eagle Outfitters drove an influx of new jean styles in the US, tentatively suggesting a resurgence of denim.
Investment in earrings and necklaces helped accessories become the second most-stocked category of new arrivals in the US, with retailers backing entry-priced items to increase basket spend. The UK has a disproportionately high investment in dresses. The category is 12% of new arrivals vs. 5% in the US, which may be an over-investment due to the extended lockdown. Look to phase deliveries of more formal styles for later months while consumers are confined to their homes and promote styles that compliment the fail-safe house dress aesthetic.
Equaling 17% and 11% of the color wheel, neutrals and pinks were of greater importance in the UK than in the US where the new denim drops propelled blue arrivals. The UK also gave continued backing to one of fall’s favorite hues – chocolate brown.
5 themes retailers will be talking about this month
Fashion’s buzzword for 2020, comfort, is still holding court. Cozy loungewear and sleepwear inspired duvet days snuggled up indoors were featured in emails from retailers like Marks & Spencer, Forever 21 and I Saw It First. A more refined version of this aesthetic carried through to WFH promotions with Bonobos and Vince offering comfy and casual alternatives to traditional office attire. Ahead of pre-spring ranges, knitwear was woven into loungewear and transeasonal dressing emails. With Valentine’s Day on the horizon, January is an optimal time to advertise lingerie, which can serve as an alternative to loungewear as retailers highlight comfort and functional qualities.
Though activewear is a proven year-round essential, January is its go-to month for promotions. The pandemic has seen retailers shift away from “new year, new me” messaging, focusing instead on communicating the importance of building a self-care routine and encouraging confidence and motivation.
As denim was overshadowed by fleece in 2020, retailers’ new season messaging challenged loungewear, including J.Crew promoting slim boyfriend jeans “relaxed enough to rival your sweats,” while Good American and American Eagle Outfitters zeroed in on stretch denim.
EDITED rounds up the key promotional messages for you each day so you know the top stories ahead of your marketing meetings. Look out for Daily Tracker – Visual Merchandising in our Retail Reports.
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