Is Black Friday still here to stay despite certain retailers choosing to shun it? It should be if you have the right infrastructure to meet consumer demand says Virtualstock co-founder Ed Bradley
Four years since the Black Friday import from the US took off in the UK in earnest, we are increasingly seeing big name retailers, particularly fashion brands, shunning Black Friday – not least House of Fraser, Marks & Spencer and Selfridges.
The trend primarily stems from concerns that the extended period of discounting will reduce margin on products that they might otherwise have sold at full price in the run-up to Christmas. Some retailers also fear that discounting products heavily over the weekend can damage the brand and level of trust from customers, particularly if they are associated with ‘everyday value’. Research from LCP Consulting showed that close to two thirds of UK retailers found the event unprofitable and unsustainable.
Even pureplay online retailers are retreating from the event as they fear that customers will order 15 plus items at a time and send the majority of them back, creating chaos in delivery networks and complaints when orders aren’t received on time.
Huge numbers of unwanted items were returned to retailers following the last Black Friday and also after this years’ January sales, putting enormous pressure on retailers’ back end operations.
Data from Barclaycard has shown that overall, the volume of transactions was 15% higher than last year’s Black Friday, although there was a drop in the amount spent. This suggests that Black Friday is clearly encouraging shoppers to buy and is still a very significant day in the retail calendar.
While there are downsides to getting involved, by not getting involved, retailers can lose out to rivals. UK consumers are expected to spend over £2,000 each in the run-up to Christmas according to research by Adobe, and Sales Force has shown that almost 40% of retailers’ annual revenue will come from Black Friday and Cyber Monday.
Consumer awareness of and enthusiasm for Black Friday on both sides of the Atlantic is extremely high and consumers are heavily predisposed to participating. Top motivational reasons for participation include taking advantage of steep discounts and also to encounter one off promotions.
It is also expected that digital and omnichannel purchasing behaviours will dominate and European consumers mostly intend to head online to shop as convenience is now key for consumers.
It all comes back to what consumers want which is product choice, delivery convenience and speed. Those retailers who have the right infrastructure to meet customer demand will always emerge as the winners from Black Friday and the festive period as they will be able to cater for shoppers of all ages and maximise the wealth of opportunities available to them, without being overly concerned about when the sales come. Having transparent and intelligent systems will also allow them to manage their margin effectively and clear stock efficiently, at the right price.
A crucial part of this infrastructure for many retailers is having effective dropship operations set up. Dropship enables retailers to expand the range of products they can sell online without holding the stock in inventory – so it comes directly from the manufacturer. It enables retailers to stay competitive digitally and fend off competition from online behemoths such as Amazon.
Speed to market is critical for retailers because trends evolve so quickly particularly over the Christmas period. For example, retailers must have the Guinness Book of Records and Jamie’s latest cook book up for sale before Christmas, because by January it’s yesterday’s news. Traditional retailers are in decline in certain categories because they cannot get products on stream fast enough to meet customer demand. But if retailers are able to get products uploaded through dropship, they should be able to scale their operations successfully to offer consumers greater choice and access to ever changing product ranges and react quickly to trends.
Overall, despite the challenges associated with Black Friday, for retailers to remain relevant and keep pace with the ever-changing consumer environment, participation in the event is important.