Commentary: From Singles Day to Cyber Monday - Branded Retail Events in a New Era of Consumerism
By Kosha Gada
It’s that time of the year again – seasons turning, holiday spirit in the air and the start of the annual shopping frenzy engulfing our nation this time every year. With Black Friday and Cyber Monday once more upon us, analysts are in full gear making annual predictions on the health of America’s retail economy this holiday season. And as we revel in the figures and what it means for our consumer confidence this year, I am struck by a larger undercurrent present: the shifting tides of the global economy, the digital economy, and how both forces are changing how we as consumers shop, share and in fact celebrate the holidays – in America and around the world.
The “Manufactured” Holiday Industry
“Manufactured” holidays are a well-established concept, particularly for American companies where the term “Hallmark holiday” has become an endearing descriptor for a “holiday” – such as Grandparents Day, Executive Assistants Day, or “Love Day” as satirized in the Simpson’s episode, the Trash of theTitans– that is perceived to exist primarily for commercial purposes, rather than to commemorate a traditionally or historically significant event. An extension of this phenomenon is the vast commercialization surrounding even days of traceable historical significance, such as Mother’s and Father’s Days, Valentine’s Day and Halloween.
The National Retail Federation estimated Valentine’s Day generated $17.3 billion, Mother’s Day $20 billion, and Father’s Day $12.5 billion in U.S. retail sales in 2014, not to mention revenues generated for other relevant industries like Travel and Entertainment who are also major beneficiaries of these “holidays.”
American companies, typically regarded to be the Kings of Marketing, have been at the forefront of this trend as it has seeped into the fabric of consumer cultures around the world. What the world witnessed last Tuesday, however, is the dawn of a new era in “manufactured holidays” and global Consumerism, driven by the world’s most populated country and its vast and growing consumer class.
A Shifting Global Epicenter
On November 11th, China celebrated “Singles Day.” While not an official holiday of traditional or historical significance, Singles Day is believed to have originated out of the University culture in China in the mid-1990s as a statement against Valentine’s Day. Today, in a country with an estimated 180 million unmarried adults, Singles Day has certainly become a national phenomenon and cause for celebration for China’s burgeoning retail industry if nothing else. While Chinese businesses have long been taking advantage of the “holiday” to engage this attractive consumer segment via targeted promotions, themed parties and other marketing tactics, what really put Singles Day on the global map this year is the sensational retail event hosted by newly public Alibaba, China’s e-commerce behemoth.
Alibaba grossed $9.3 billion USD in gross retail sales in 24 hours, almost reaching their annual revenue from the prior year in a single day (no pun intended). At its peak, this translated to a sell-through rate of $450 million USD per hour. For added context, this is almost double of what Black Friday and Cyber Monday grossed in the U.S. combined last year.
Behind the wow-factor of the numbers lies the even more fascinating story of the marketing genius of Alibaba and how it took a page right out of the American “manufactured holiday” playbook to commercialize a decade-long cultural movement among Chinese youth into a global retail firestorm of proportions never seen before.
Intersecting this marketing success story with the raw facts of China’s growing consumer class sets up the inevitable question – is the epicenter of the global retail economy shifting? Alibaba certainly thinks so, as it rolled out the red carpet for global brands last Tuesday from Adidas to Massimo Dutty, enabling them to capture a piece of the $9 billion dollar Singles Day pie.
On the other side of the equation is also the new bridge this builds between consumers around the world and Chinese sellers. This is already taking place to some degree on Amazon, where consumers can buy anything from designer wedding gowns to salt and pepper shakers directly from Chinese manufacturers, generally for a fraction of the price for similar items in their home markets. Alibaba is of course a natural platform to amplify this and the Singles Day extravaganza uncovered some unexpected pockets of consumer demand for Chinese brands, such as from Russia. While retail movement in this direction is still very nascent, it sets up interesting paradigms for the future of global retail.
The Digital Effect
The unsung hero in November 11th’s historic Singles Day is the digital economy – which continues to break down barriers from logistics to geography at an exponential rate. Never before has there been a faster, cheaper and easier way to connect buyers and sellers from around the world, to commercialize “manufactured holidays” and create retail history.
The other side of the coin for the impact of the digital economy on retail, however, is the dilution it inherently brings to branded retail events like Cyber Monday, due to the propensity e-Commerce brings for shopping anytime, anywhere. Much has been written about the genesis of Cyber Monday’s success being driven in part by factors such as the difference in dial-up speeds at home over the Thanksgiving holiday versus in offices the Monday after. As such factors increasingly erode, coupled with post-recession consumer frugality, retailers are reevaluating the cost-benefit of the heavy promotion and discount based strategies surrounding such major retail events versus taking more staggered or “everyday low” approaches year round. Others are staying true to the tried and tested formula, ascertaining that the collective marketing halo around established “manufactured events” provides residual benefits to them individually yet.
What the Future Holds
As we step back from the $9 billion dollar haze of last Tuesday and the expected $5+ billion onslaught next week, we find ourselves faced with a broader question this holiday season: what is the significance of such retail events built around incipient cultural norms for brands and consumers going forward? Does the constancy afforded by the digital economy dampen their historic magic or do emerging consumer classes eager to partake in the frenzy ensure their success for a new generation?
Where the future of “manufactured holidays” nets out and its impact on the retail culture surrounding it remains to be seen. But one thing is for certain – what consumers want is becoming increasingly diverse and segmented the world over. What is therefore likely to separate the winners from the rest are brands and retailers with an almost obsessive understanding of this phenomenon and a correspondingly nimble strategy to capture it. Never before has smart segmentation and an understanding of the global consumer, in all his / her versions, been more important. And as we ring in the holiday spirit this season, manufactured or otherwise, retailers and marketers everywhere are taking notice.