Whether retailers love it or loathe it, the Black Friday phenomenon is now a firm date in the retail calendar, and with only 35 days until Christmas the countdown is on for shoppers to bag some bargains on a day that last year marked the industry’s biggest discounting event.
The relatively sudden arrival of the event on British shores last year caught out a number of retailers. Unprepared for the level of customer demand, online fulfilment logistics were tested to the extreme, leading disgruntled customers to complain of late or cancelled orders. As a result, retailers are adopting more cautious promotional strategies this year.
At such a crucial time, it is important to see if their promotions are well targeted, if they have the infrastructure to cope with the surge in sales and footfall, and how Christmas margins will be affected. Ultimately, retailers need to be sure that participating in this growing phenomenon makes sense commercially.
One argument is that those not participating will be left behind, but does Black Friday hold universal appeal? Perhaps not. According to data from our Shopper Tribes Report, nearly three-quarters (74%) of shoppers aged over 55 said that Black Friday had no impact on the timing of their Christmas shopping, suggesting that there is appetite and scope to hold back deals for the traditional December shopping season.
But with the latest estimates from the Centre for Retail Research forecasting sales of £1.4bn on Black Friday, this year, it seems evident that the bonanza will eclipse last year. Keen to avoid the mayhem of 2014, retailers will have been preparing for the event for most of the year. Just how they seek to entice customers, offer attractive discounts across the right products, yet leave enough in the tank to encourage them back through the doors in the run up to Christmas is yet to play out.
The Shopper Tribes Report indicated that it was a “Black My-day” in 2014, as customers took advantage of deals to treat themselves rather than others. An overwhelming majority (84%) of younger women aged between 18 and 34 used last year’s Black Friday to stock up on fashion items or homewares, rather than capitalising on Christmas gifting deals. So how will the lessons from last year affect retailers’ strategies leading up to the big event next week?
It is likely that promotional activity will be more targeted at specific products and categories rather than wholesale offers across the board. This will enable retailers to better control margins on key Christmas lines and maintain consumer demand in the weeks leading up to Christmas. Headline deals across electricals, clothing and footwear may whet consumers’ appetites on Black Friday, and officially fire the starting gun for a more even and sustained festive shopping period in the run up to Christmas.
Evidence from across the sector suggests that retailers are better prepared, having invested heavily in upgrading logistics and multi-channel capabilities. Of course, there will be winners and losers, but overall we expect a more measured approach from retailers to create sustained momentum throughout the festive trading period.
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David Atkins is chief executive at Hammerson
