Black Friday Shop Flop to be followed by Cyber Sigh Monday?
I ran a straw poll amongst business contacts today on a Twitterchat, #Surrey Chat. It is the morning after the day before i.e. Black Friday and 2 days before Cyber Mond
ay. There was an over-riding theme:
Lack of enthusiasm around Black Friday (at my Business Hub on the day itself, it was not mentioned once and this was in a room full of business owners including some involved in retail…), this was reinforced by tweets today such as "Gawd No!"
Evidence of people “holding back” on desired purchases until Black Friday
Main purchases for themselves, rather than Christmas presents
Online was overwhelmingly preferred channel, although anecdotal feedback suggests larger stores especially in London, were an exception
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So from a UK customer/business point of view – should we have a Black Friday next year?
YES – afterall why would you turn down a discount? Other American imports, such as school proms seem to work well.
OR
NO – it’s a messy Americanism, let’s keep to the Boxing Day tradition kicking off the January Sales.
I want to know your thoughts, please comment via my website www.zoegriffithsconsultancy.com or tweet (@griffithsz)
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Poll Quotes
(Acknowledgements and thanks to all at #SurreyChat and those in Farnham, Haslemere and Guildford Business Hubs)
History
“Black Friday” started in the USA and is the day after Thanksgiving (i.e. the equivalent of our UK Boxing Day sales), when retailers knock down prices across their stock to kick-start the present-buying season. It is this time in America, when many are still off from work and feeling full of food and wellbeing – so perfect for some retail therapy then…. !
Black Friday was first introduced online to the UK 5 years ago by Amazon. In 2013 Asda, which is owned by American retail giant Walmart, participated in UK’s version throughout its stores and last year most major UK retailers jumped on board both in town centres as well as online. These included Marks & Spencer, Argos and John Lewis.
Black Friday in November 2014 was a spectacle in the UK, for all the right reasons but also for many wrong ones too. The size and scale took everyone by surprise, as order volumes were around 30% higher than expectation, overwhelming some retailer operations – in physical stores as well as online The psychology of crowds desperate for bargains was fascinating, yet shocking, to see, with fights breaking out amongst otherwise courteous people, over a toaster with £20 off. This was all the more remarkable when the parties involved probably had set out wanting to buy a HD TV originally too! It is fair to say that many retailers did not anticipate just how many people would walk into their stores, so as a result had inadequate security and in-demand stock resulting in chaos, police and ambulances. No-one involved in retail wanted to see this happen again.
And from a business point of view, does Black Friday make commercial sense from a retailers’ viewpoint?
I would argue No because:
It slices into their profit margins at a critical business period (the 6 weeks in the run-up to Christmas generate on average half of annual sales and profits)
Reduces opportunities for upsell
Goes against the age-old rule in that pricing reflects demand versus supply. And this is undeniably a period for increased demand.
Runs the risk of shopper fatigue / apathy
BUT given that online spend, particularly on high value items, is the biggest threat to town centres, can our High Street retailers afford not to?!?
So what was different in the run-up this year?
Well firstly Asda bucked the trend by refusing to participate. Instead they announced that they would knock a total of £26m off their products over November and December, rather than slashing prices on big-ticket items for one day only. Chief executive Andy Clarke said, "Customers have told us loud and clear that they don’t want to be held hostage to a day or two of sales."
Tesco, as did most other large store chains, have continued with Black Friday retail campaigns. Tesco also took precautions by also hiring in extra security and putting additional barriers in place after fights broke out last year and 2 stores were forced to close.
Some retailers however are spreading their “Black Friday” deals over 3 days – extending the period. Carphone Warehouse and Curry’s PC World are going one further by running 10day “Black Tag” events.
Overall though, my perception, and feedback from others (friends and family included as well as business owners) are that the deals in physical stores have simply not been seen as attractive. Whilst there has been the odd “50% off bargain”, the overall impact has resulted in a lack of enthusiasm from consumers UK-wide.
Marketing activity for online
purchasing, on the other hand, has built up massively ahead of the day. It is predicted that internet sales over the 24-hour period are expected to exceed £1Bn for the first time in UK history, and that it would be online sales that would attract the majority of consumers.
This year, internet sales over the 24-hour period are expected to surpass £1bn for the first time in UK history (Source: According to new estimates by Experian, in conjunction with IMRG, the UK online retail sales are expected to hit £1.07bn on Black Friday, a 32% increase over £810m in 2014. EBay said it anticipates 9m Brits will visit its website on Black Friday, buying 25 items every second.”
Justin Opie, managing director at IMRG, said "All the indicators point to a much larger Black Friday this year – both in terms of greater numbers of retailers taking part and growing shopper interest – so the opportunity is vast, but there are many things to consider if it is to be managed efficiently and effectively."
So did it live up to expectations??
It rained! – no joke but this does have a real impact on how many people visit stores on the High Street versus visiting indoor shopping centres or even more tempting, staying on the sofa and shopping online!
I think that the events of last year, frightened retailers on the High Street to an extent. There has been a huge increase in “click and collect” combined with the majority of customers opting to buy online rather than visit the physical store. I suspect this will mean that the volumes of visitors in towns will be down year on year, and this will hurt smaller retailers especially Independents without any online channel options.
(Source International Business Times) “Amazon claims 2015 Black Friday was its biggest sales day in the UK ever, with more than six million items being ordered. This beats the record of 2014 when the company sold more than 5.5 million products at a rate of 64 items per second.”
But online chaos was a downside for some
Heavy internet traffic led to John Lewis's site going down in the afternoon on the 27th November, which will prove to be undoubtedly costly for them. “They (John Lewis) report annual online revenues of £1.4 billion and here at Capacitas we typically see 2% of demand taking place on Black Friday. In addition 10% of the Black Friday day's sales take place in the peak hour. This means an hour of downtime on the John Lewis website could amount to £2.8m in lost revenue," said Danny Quilton, chief technology officer at Capacitas.
Meanwhile, other websites such as Argos site slowed down significantly (its page load time exceeded 10 seconds, when compared to 0.5 seconds page load time for Amazon), although they were quickly responsive in acknowledging customers’ concern.
However PC World claimed its biggest start ever with eight sales per second and 100 large screen TVs selling in per minute online. It claimed to have 400,000 visitors per hour to its site, an increase of up to 70% over 2014, suggesting that their strategy of a 10 day event may prove to be very successful in terms of total sales volumes.
My predictions for 2016
Online traffic and sales will continue to grow
There will be some significant issues with the sheer weight of web traffic
Face-to-face retail stores need to "sales proof" themselves by using immersive sales technologies or we will see an increase in High Street vacancy rates come January
