Is Black Friday an opportunity or a threat for retailers and/or consumers? As this US imported event extends from the traditional one day to two, three and five days – or even a fortnight – is it a question of jumping on the discount bandwagon? How is this viewed by the conscious consumer? Is there a movement to counter the madness of over consumption?
Threat or opportunity for retailers?
This is a real question for retailers, and their dilemma is either:-
- Give away precious margin through discount to keep up with the rest of the Black Friday deals or
- Opt out of Black Friday discounts in the hope they will sell at full margin through December
Giving away up to 50% discount is risky at the best of times. Retailers have to make up the lost margin with higher volume sales to make the same, or hopefully more, profit – and this is at a time of the year when stores expect to sell their highest volume of goods at full margin. Thomas Burke of Retail Ireland sums it up well.
“Consumers are now expecting deep discounts of as much as 50% on a wide range of products. But retailers are increasingly reluctant to engage in such deep discounting for fear that they are merely displacing sales that would otherwise happen later in the Christmas shopping period at more normal price levels.
Burke notes that in 2017 retail sales in December fell by 2.6% compared to the month before:
“a sign that a significant portion of the traditional Christmas purchases were brought forward into November as consumers availed of deep discounts. In the current environment with the economy expected to grow by up to 9% this year and consumer disposable income growing by 4.4%, retailers are increasingly reluctant to give away margin.”
When it comes to Black Friday Irish retailers appear to fall into two camps, according to Burke, “while some retailers now view the event with suspicion and an element of dread, others continue to embrace the promotional window with retail categories such as electronics and fashion now running week, and indeed fortnight, long promotions.”
In the US there is a movement away from Black Friday by REI (Recreational Equipment Inc), a national outdoor retail co-operative employing more than 12,000 people, selling outdoor clothing and equipment. In their third year of #optoutside they have given all of their employees two days off (Thanksgiving and Black Friday) so that they can spend time with friends and family. Over 700 organisations have since joined them.
Switch to online shopping
There is some evidence to suggest that shoppers are switching to buying online during the Black Friday sales to avoid the crushes and the queues. Argos reported this year that 50% of its sales on Black Friday were online, up from 40% last year. Even Aer Lingus has got in on the act with Black ‘Flyday’.
And so to consumers
When is a deal not a deal? It could be when it is advertised as a Black Friday deal. Consumer Magazine Which? did a survey on last year’s Black Friday deals and found that many items could have been found at the same price or cheaper at other times of the year. More than half the items surveyed were either cheaper before or after Black Friday.
Black Friday does provide the opportunity to get a bargain but consumers should question whether they actually need it. This is my favourite and often quoted saying that is worth remembering when you contemplate your Black Friday purchases.
“Consumerism is about buying things we don’t need, with money we don’t have, to impress friends we don’t have time for”, says Leo Horrigan.
There are also several new ‘days’ to coincide with Black Friday – Green Friday, Plaid Friday, Giving Tuesday and Buy Nothing New Day. Green Friday and Buy Nothing New Day are to encourage more conscious consumerism (see my previous blog on this subject).
As another US phenomenon, “The name Plaid Friday was conceived from the idea of weaving the individual threads of small businesses together to create a strong fabric that celebrates the diversity and creativity of independent businesses. Plaid Friday is the relaxing and enjoyable alternative to the big box store “Black Friday,” and is designed to promote both local and independently owned businesses during the holidays.”
Giving Tuesday is another US movement which falls the week after Black Friday. It aims to encourage consumers to give their time, donations, goods or voice to charities – perhaps in a bid to assuage some of their buyer remorse and guilt!
My personal list for a profitable Black Friday for retailers
If you “view the event with suspicion and an element of dread”, here are some suggestions.
- Discount merchandise that you know was a bad buying decision (we all have them!)
- Decide a realistic volume increase and calculate a discount so that you don’t lose margin
- Go with the flow and have a festive atmosphere – Christmas music, free mince pies, Santa hats, you get the idea!
- Promote your Black Friday deals on social media
- Don’t do a blanket discount, i.e. everything 20% off
- Don’t follow the competition just because they are offering a higher discount than you
Lastly, as an experienced retailer and savvy shopper what did I buy on Black Friday? Nothing! I will wait for the post-Christmas/January sales when the real bargains are to be had.
© Retail Renewal 28/11/18
Retail Renewal offers practical solutions for the ever-evolving challenges of running a retail business today. Find out more on www.retailrenewal.ie If you’d like to get in touch with Retail Renewal about your shop or retail project please give Linda a call on 086 8146949. Let us help you to support and grow your business.