Black Friday – the annual event which saw sheer pandemonium brought to some of our retail stores last year, as frenzied shoppers fought to take advantage of retailers aggressive promotions.
It is estimated that online sales this Black Friday will top the £1 billion mark, with Cyber Monday sales not far behind. These figures are a significant increase on last year, with both days now generating bigger sales than Boxing Day.
But is this really good for retailers and consumers?
Land-based operators reported a decline in sales of 1.4 per cent between Black Friday and Christmas last year, with many subsequently admitting that Black Friday had hit their margins and profits.
This year ‘land-based’ shopping is set to increase by an average 11.5 per cent on Black Friday across high streets, shopping centres and retail parks.
But who will be the likely winners and losers this year?
Savvy Consumers; clear winners on Black Friday are those savvy consumers who know what they want and have held out for the ‘deep’ discounts. Are they really shopping for Christmas? Many aren’t – they are demonstrating New Year sales behaviours a month early! Other savvy consumers have no intention of holding onto their purchases; as many as one in five bought and then sold for a profit last year!
Internet Retailers; for pure on-line retailers like Amazon Black Friday is their nirvana! They have the systems, logistics and capacity to drive massive volume which more than compensates for lost margin. No wonder Amazon is one of the prime movers behind the Black Friday phenomenon!
Food and Beverage Sector; over the past seven years food and beverage offers in shopping centres have doubled in space from 7 per cent to 15 per cent, gobbling up vacant units, taking advantage of favourable terms and rents being offered by desperate landlords. The ‘retail tourism’ created by Black Friday (where consumers ‘go look and see’ before purchasing on-line) will provide another useful ‘spurt’ to a burgeoning and vibrant sector of the market.
Logistics and Delivery Companies; last year retailers failed to cope with the massive spike in demand that Black Friday created – this year they will be better prepared by sub-contracting out delivery services to ensure they honour their ‘customer promises’. Happy days for the traditionally ’squeezed’ transport sector!
‘Frenzied’ Conspicuous Consumers; to a large extent Black Friday is a ‘discount window’ for instant consumer gratification. There was plenty of evidence (given the number of ‘comps’ and returns that companies registered last year) that consumers are driven to indulge in ‘frenzied conspicuous consumption’; buying in haste, but repenting at leisure!
General Retailers; if the ‘multi-channel’ and pure land based retailers thought last year was bad, this year could be even worse. Although some retailers like Asda have said they are intending to ‘dial down’ the day (given the unedifying scenes as some frenzied consumers jostled for discounted goods), the tiger is out of the cage! British shoppers love nothing more than a bargain; supermarket retailers who have seen their industry margin plummet from 5 per cent to 2 per cent over the past few years (due to a change in shopping habits and the ‘hard discounter’ attack) are going to have to take more pain here. Those operating ‘multi-channel’ formats are likely to experience IT, logistics and supply chain problems due to unprecedented surges in demand that – whilst they have planned for – are too ‘violent’ for their current systems to cope.
Shareholders; Black Friday and Cyber Monday are part of a longer term trend hitting UK retail; they are stimulating internet purchases, which consumers have researched through their own investigative ‘retail tourism’ on the high street. The shift between higher margin land-based and lower margin internet channels continues unabated. Retail stock market values have taken a battering over the past three years; this pain will most likely extend well into the future.
Source: Professor Chris Edger, retail expert, Birmingham City University
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