White Friday and Dubai Shopping Festival 2019: Retailers without a Clever Discount Strategy Risk Avoidable Losses

An international Simon-Kucher study shows how awareness of White Friday varies between countries. The event is bound to become more popular in the UAE as e-commerce expands into the region.

Retailers should set up their discount strategy wisely to avoid losses as consumers take the opportunity to make planned purchases.

White Friday (commonly recognized as Black Friday outside of the UAE) is well known among consumers of all ages in the US, Germany, Italy, Spain and Turkey (almost 100%). However, consumers in other countries are less aware of the shopping event, particularly in the Middle East and Asia. In Japan, awareness is much lower (54%) whilst in the UAE, only 36% of respondents have heard about White Friday. This is far less than the 99% of those who are familiar with the Dubai Shopping Festival.

Moreover, willingness to buy during White Friday was lower in the UAE than in other countries. Only 45% of respondents showed an interest in buying during White Friday, compared to 79% in Turkey or 78% in the US. Only in Japan and Latin America was willingness to buy during White Friday lower than that of the UAE. These are the key findings of the White Friday and Dubai Shopping Festival study* conducted by the global strategy and marketing consultancy Simon-Kucher & Partners.

The rise of e-commerce is expected to drive awareness levels

The low awareness of White Friday amongst consumers in the UAE is likely due to the relatively nascent nature of the e-commerce sector in the region (as an example, Amazon only entered the market this year). Additionally, White Friday was introduced after the Dubai Shopping Festival had secured its position as the most popular shopping event in the UAE.

“Awareness of the White Friday concept is expected to increase rapidly in the coming years due to the rise of e-commerce and marketing spend around the event.” says Lovrenc Kessler, Managing Partner at Simon-Kucher in Dubai. "Understanding consumers’ awareness levels of shopping events is essential for retailers and should be taken into account when planning the year-round discount strategy" he explains.

Figure 1: Awareness of White Friday in the countries studied

Consumers’ budgets in the UAE are much higher than in other countries

There are significant regional differences when it comes to budget. For example, consumers in the UAE plan to spend on average USD 756 (AED 3,077) on White Friday or the Dubai Shopping Festival. This is almost three times more than the budget that consumers in other countries allocate for the main shopping event. For example, in Turkey, the average planned budget is USD 294 (AED 1,197), slightly higher than the counterpart budget of USD 253 (AED 1,030) in the US. On the other hand, in Singapore the budget for such an event is around USD 189 (AED 768). It is worth noting the higher shopping budget allocated to White Friday/Dubai Shopping Festival observed in the UAE is coupled with the higher prices in the region.

In the UAE, the respondents' willingness to pay is highest in the electronics category at USD 1,174 (AED 4,780), a trend similar to international behavior due to the more expensive nature of these products.

Figure 2: Expected White Friday spent value per person (USD)

Differentiated discount levels are necessary

“Understanding price markdowns expected by consumers is essential for retailers to adjust their discount levels and avoid over-discounting” says Gawel Adamek, Director in the Consumer Goods & Retail practice at Simon-Kucher in Dubai.

It is a common practice for retailers to offer larger discounts than those expected by consumers in promotional events such as White Friday. Rather than having a positive impact on sales, this erodes margins and results in avoidable revenue losses. In the UAE, 53% of respondents expect discount levels to be between 25 and 50% on the original price, with only 30% of respondents expecting a discount above 50%.

"Retailers may over-discount their products to attract more consumers, with volume uplifts not compensating for the price decreases. An important aspect of revenue management on commercial events such as White Friday is to set discount levels on consumer expectations for each product category" explains Gawel. While in the fashion category, for example, almost half of respondents expect discounts larger than 50%, only 15% of respondents expect these large discounts in the electronics category. "Flat-rate discounts such as "30% off everything" should be avoided. Instead, targeted campaigns for certain products in the different shopping events can lead to improved profitability throughout the year. The right price communication also plays an important role here." adds Gawel.    

Future outlook: White Friday will deliver opportunities for retailers in the UAE

It is expected that White Friday becomes an increasingly important event for retailers, as e-commerce takes off in the UAE and marketing investments are directed to increase awareness of the commercial event.

“As the White Friday event gains scale in the UAE, retailers should streamline their discount strategies to match consumer expectations and leverage the growth potential that e-commerce will bring to stand at the forefront of commercial management. This, combined with the high budget allocated to shopping events by consumers in the UAE presents an attractive opportunity for retailers.” concludes Lovrenc.

* About the study: The study White Friday and Dubai Shopping Festival 2019 was conducted by Simon-Kucher in October and November as an online survey. A total of almost 12,000 consumers in 14 countries** were asked about their consumer behavior on these two days.

** Argentina, Chile, Denmark, Germany, Italy, Japan, Singapore, Spain, Sweden, Turkey, Mexico, Netherlands, UAE, US.

Simon-Kucher & Partners, Strategy & Marketing Consultants: Founded in 1985 in Germany, Simon-Kucher & Partners is a global consulting firm with more than 1,500 professionals in 39 offices worldwide focusing on TopLine Power®. The company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.