Retailers need to ‘get smarter’ when planning future Black Friday sales, or else they risk eroding both their margins and the margins of the retail industry at large, a leading retail analysis firm has warned.
Commenting on this year’s Black Friday sales period in the UK, analysts Stifel said that the phenomenon has seen the development of ‘proactive’ (Amazon kicked off its promo season on Friday 16th November, one week before Black Friday) and ‘reactive’ retailers, which based their strategy on the general market environment.
Staggered Promotions
Retailers that adopted a strategy of offering something ‘new’ every day, particularly in the online space, saw increased numbers of consumers returning, Stifel noted, with boohoo.com offering progressively deeper discounts in the run up to Black Friday (the retailer applied discounts of 20%, 25%, 30%, 50%, 60%, 70% and 30% over a week-long period).
‘It's difficult to like Black Friday, if not a customer: it erodes the margin of the industry and educates shoppers to wait for discounts,’ Stifel said in a briefing note.
‘However the event represents a unique opportunity for retailers to acquire customers and increase their level of engagement over one of the two trading peaks of the season. A "blanket approach" (ie. Superdry's 20% off everything) is not necessary, as a selective discount strategy, run with different deals every day, attracts more customers and increases frequency through higher footfall/web traffic.’
Five Years On
Black Friday has been present in the UK since 2013, when it was introduced by Asda.
This year, the sales uplift from Black Friday has been estimated at around 3.1%, with sales of £10.4 billion anticipated between Monday November 19 and Monday November 26, according to GlobalData.
‘Retailers should also see Black Friday as an opportunity for customer acquisition,’ said Stifel.
‘It’s not about whether to participate or not, it’s about how to fit Black Friday in the overall business strategy and whether it, or another sales event, is going to have more power in attracting and more importantly keeping the customers.’
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
