As the leaves change and the chill of autumn sets in, the season of spookiness descends upon us. Halloween is not only a time for costumes and candy but also a season of thrilling deals.
Since 2005, Halloween spending has been on an unrelenting upward trajectory, with expenses showing a gradual and persistent increase. This upward trend can be attributed to a combination of growing demand and the impact of inflation. Over the last two decades, the cost of Halloween decorations, candies & costumes has seen a steady climb. Halloween season seems to be setting new price records every year, making every financial decision all the more crucial.
With the economy on the mend, more Americans than ever are expected to reach deep into their wallets to celebrate Halloween this year. A record-breaking year is anticipated for Halloween spending. This is a critical time for businesses to consider when setting their prices, as consumer appetites for spending are running high.
WINTER HOLIDAY SHOPPING - CONSUMER SURVEY 2023
The month of October is the epicentre of Halloween shopping. In fact, a survey by NRF shows the majority of consumers plan to begin their shopping during this month and continue right up until December. This extended shopping period highlights the importance of pricing strategies to help brands remain competitive throughout this timeframe. Consumers are continuously assessing and comparing prices, making it essential for businesses to get their pricing right, from the start. So the prices you set right now are absolutely pivotal!
This year an all-time high of 73% of consumers plan to celebrate Halloween this year, according to the National Retail Federation’s annual Halloween consumer survey. As a cherry on top for retailers, Halloween spending is projected to reach a staggering $12.2 billion, breaking last year’s record of $10.6 billion, making it an enticing season for businesses.
Our Research..
To make the most of this bustling Halloween marketplace, it’s crucial for retailers to understand the importance of setting competitive prices that align with market dynamics. So we present to you, a thorough research we conducted to show the impact of this crucial practice.
Objective: To highlight the importance of setting competitive prices according to the market.
Methodology: Our approach involves a comprehensive analysis of the top 10 SKUs available on Amazon.com. These SKUs are selected based on their sales rank, a pivotal indicator of product performance. We have meticulously examined the pricing and sales rank of these products over a two-week period, spanning from October 2nd to October 18th. This analysis is rooted in the understanding that, especially on Amazon, sales rank plays a critical role in ensuring a product’s visibility and, subsequently, its conversion rate.
Findings:
The Halloween season is an intensely competitive period. Many products in order to capture this demand have rolled out deals and discounts.
Our research unmistakably reveals that products implementing festive discounts have witnessed a substantial upswing in their sales rankings. Out of the top 10 products we examined, 8 of them experienced a notable improvement in their rankings after introducing these discounts.
Conversely, the remaining two products suffered the consequences of failing to align with the market dynamics. We have conducted a detailed analysis of one product from each of these distinct patterns, which we present below.
Case analysis:
To uncover this, we analysed a product 5’s pricing in relation to its rank at the onset of Halloween month and two weeks into it.
Effect of competitive pricing (PRODUCT 7)
Date | Price | Rank |
OCT 2nd, 2023 | $74.61 | 1325 |
OCT 18th, 2023 | $52.99 | 97 |
-
Product 7 exemplifies the impact of pricing strategies on product performance. On October 2nd, it was priced at $74.61, and its rank stood at 1325. However, by adopting a competitive pricing approach and reducing its price to $52.99, Product 7’s rank experienced a remarkable surge, catapulting from 1325 to 97. This dramatic shift equated to a 92.45% increase in its popularity.
-
The data clearly illustrates that this product has undergone substantial improvements in its rank when accompanied by discount offerings. Conversely, when higher prices were imposed, the product’s rank suffered a decline, highlighting the sensitivity of consumer behaviour to pricing dynamics.
-
With a correlation coefficient of 0.79, there exists a high price elasticity in the relationship between its price and rank. This underscores the significant influence of consumer preferences and the strategic impact of pricing strategies on a product’s overall performance.
However, products that don’t maintain competitive prices, lose a lot of potential revenue opportunities. Simply allowing pricing to remain fixed or consistently charging either a high or low price is not the solution. Profitability comes from the right pricing.
Effect of neglecting competitive pricing (PRODUCT 5)
The product mentioned below could have avoided missing out on numerous revenue-generating opportunities.
Date | Price | Rank |
OCT 2nd, 2023 | $39.87 | 38 |
OCT 18th, 2023 | $48.99 | 53 |
By 18th october the price of this product was almost 48.99$ pushing its rank down to 53. This has pushed the product from the first page of the catalogue to the second. This is a very significant loss for the product’s potential profit.
On October 2nd, 2023, this product was competitively priced at $39.87, securing a robust rank of 38. However, as the Halloween season progressed, the product witnessed a detrimental decline in its sales rank, primarily due to a persistent increase in its price. Unfortunately, the product failed to adapt swiftly to changing market conditions.
Over the course of two weeks, while competitors flooded the market with Halloween discounts, this product’s price surged by 20%. By October 18th, it was priced at nearly $48.99, causing a substantial drop in its sales rank to 53.
This significant loss in rank resulted in the product being pushed from the coveted first page of the catalogue to the less prominent second page. Consequently, this transition has had a profound impact on the product’s potential for profit, as visibility and accessibility to potential buyers are greatly reduced.
Final thoughts:
A fluctuating sales rank signals a product’s presence in a fiercely competitive market where factors like price, as well as more subtle elements like promotions, new product releases, or even customer preferences, can influence sales.
Halloween pricing is no child’s play. As we approach this spooky season, both consumers and businesses must navigate these pricing trends with care and speed. Halloween spending shows no signs of slowing down, and with record-breaking spending predicted for 2023, it’s more crucial than ever for businesses to get their pricing strategies just right.
As the Halloween season approaches, remember, the price you set today may be the difference between a trick or treat for your profitability!
BRIO, our AI dynamic pricing solution, can guarantee your product is optimally priced consistently for the changing market.
Book a free demo of our automated retail solutions or contact our optimization experts at info@sciative.com.
To learn more about our AI-powered dynamic pricing tool BRIO, reach out to us.
