Black Friday. The American retail phenomenon. Usually the day after Thanksgiving Day and billed as the start of the Christmas shopping season. Billions of dollars being spent by consumers, enticed by heavily discounted items from all retailers, for one day only. A phenomenon that was imported to the UK a few years ago by American owned retailers such as Asda and Amazon.
Whilst a new concept to the UK market, the popularity of Black Friday grew steadily between 2010 – 2013. Such was the growth in popularity, that in 2014, Black Friday was the peak day for pre-Christmas online sales. With more and more retailers joining the Black Friday race to try and get a share of sales, widespread media coverage of customers queuing and rushing in to stores (who remembers the images of customers scrambling to get to a £100 flat screen TV at Asda?), more and more customers waited for Black Friday before commencing their Christmas shopping. The added excitement of not knowing what was going to be on offer or what level of discounts were going to be offered fuelled the hysteria. Retailers also started stretching the Black Friday sales by announcing sales leading up to and post Black Friday giving customers a longer period to snap up bargains.
But is Black Friday as amazing as it sounds? For both customers and retailers?
From a retailer’s perspective, there is no doubt that Black Friday initially worked to bring customers in and drove significant sales and footfall uplift. But were these sales truly incremental? In most cases, no, they weren’t. The impact of Black Friday was that in order to attract customers, retailers had to slash prices, in effect slashing their margins. This too at a time (4 weeks before Christmas), when they could be making full priced sales rather than selling heavily discounted merchandise. Another impact of Black Friday for retailers was that the shape of their Christmas trade changed. Whereas non-food retailers would historically see peak sales in the weeks leading up to Christmas, the impact of Black Friday was that sales were pulled forward in to November, when customers stocked up on Christmas presents at discounted rates rather than buying them at full price in December. This then led to earlier discounting with many retailers having to kick off their Boxing Day or January sales before Christmas in order to reduce or clear seasonal stock.
Customers also started getting savvier with their shopping. With everyone from retailers to local businesses offering some sort of a ‘Black Friday Deal’, customers started questioning the true value of discounts they were getting. In 2017, the consumer group Which? reported that more than half of Black Friday deals on offer that year could in fact have been bought cheaper at another time of the year. Consumers can still be the ultimate winner if they shop around and buy in to the right deal – for many retailers, the fear that their shops will be left empty during Black Friday if they don’t offer some sort of a deal means they are almost forced to take part in the event, in many cases having to use this as a margin dilutive or loss leading event. This puts added pressure on the bottom line of retailers who are already struggling with factors such as reduced high street footfall and consumer spending, increased minimum wages and high rents and rates, not to mention the ever increasing uncertainty over BREXIT and the weakening sterling. Retailers are already having to offer discounts all year round to keep customers coming in to their shops and Black Friday comes at a time when most retailers would otherwise have the opportunity to sell products at full price.
Whilst we won’t see the concept of Black Friday disappear from the UK retail landscape (Amazon have extended their Black Friday period this year to 10 days), we are definitely starting to see a shift in attitude towards Black Friday from both retailers and consumers. B&Q recently announced that they are abandoning offering Black Friday deals, instead focusing on their ‘Everyday Low Prices’ which they say their customers prefer, compared to one-off, short-term deals. B&Q’s own research shows that 46% of customers who participated in their survey weren’t planning to take part in Black Friday this year whilst 43% said that they ended up returning products that they bought in impulse led by short-term discounting events like Black Friday. Another retailer, and one of the original importers of Black Friday in to the UK, Walmart owned Asda supermarket has also announced that it is opting out of Black Friday this year, instead opting to offer its customers ‘special deals’ over a longer period of time leading up to Christmas. In a statement, Asda cites ‘shopper fatigue’ as one of the reasons for its decision and also listing similar findings as B&Q in that customers prefer deals over a longer period rather than short-term, heavily discounted deals.
There was no shortage of retailers offering Black Friday deals this year but with the challenges facing the retail industry and the significant pressures on their cost base, it remains to be seen whether Black Friday will become a long term feature of retailers promotional calendars or whether it will slowly become extinct. As one CEO of a major high street discounter once told me “Every day is Black Friday when you shop at our stores”. With the retail landscape changing, that statement may well become true for more retailers in years to come.