Black Friday: A retail success or a drain on bottom line profitability?

Black Friday 2015 came and went and retailers are now holding their breath to see how successful their Christmas  trading...

Black Friday 2015 came and went and retailers are now holding their breath to see how successful their Christmas  trading

has been.  Our earlier blog looked at Black Friday: Will retailers end up in the black or just black and blue? So what was the impact, and is Black Friday here to stay?
Well it seems that for those involved in the event, records have been broken and increases to bottom line profitability achieved.  In the UK, Dixons Carphone reported a record trading day and posted soaring profits.  On Black Friday they were said to be making 8 sales per second. Amazon declared it to be its biggest UK sales day ever with more than six million items ordered over the weekend, up from 5.5m in 2014.
In the US, Toys R Us and Target said that sales were solid during the event with long lines down the street from the 6am opening time.  Macy’s reported waiting lines of 15,000 people, a similar level to the previous year.
In 2015 many retailers lengthened their Black Friday events starting deals a week earlier. However research data from NPD Group and CivicScience indicated that these deals had only encouraged an increase of 6% in purchases compared to the week before. Lengthening the event actually led to increased overheads as stores were competing with themselves across a greater number of shopping days as well as between their bricks-and-mortar stores and online channels.
Digital was a crucial factor in 2015, with many more shoppers taking to websites for deal comparisons and to make final purchasing decisions.  There was a large rise in the number of consumers buying online and opting to pick-up in store. This was a positive result for retailers, as it saved them on shipping costs and also encouraged shoppers to pick up additional purchases while they were in store.  Research by Experian and IMRG suggested that online sales reached £1.07 billion during the Black Friday weekend, a 32% increase on last year’s £810 million achieved.
However this online surge did cause problems for some of the retailers whose websites were unable to cope with the sheer volume of visitors.  Some lost service during critical trading hours which will have cost them dearly in revenue potential.  Many shoppers took to social media to vent their anger at these technical problems, with John Lewis and Argos amongst some of the most Tweeted about.  An IT analyst from Capacitas is quoted as saying that this technical failure will have cost John Lewis as much as £2.8 million.
Another noticeable trend for 2015 was the increase in numbers of shoppers making purchases through mobile channels.  At John Lewis for example, it is estimated that 36.1% of online sales on Black Friday were placed via smartphones and tablets.  This was a trend that continued in the lead up to Christmas.
Retailers managed to avoid embarrassing Black Friday PR in 2015 with in-store fights kept to a minimum helped by many shoppers using online channels to buy their goods. However this put customer service channels under significant pressure, and therefore social media and online reputation management will be a key concern for retailers in the future.
So it looks like Black Friday is to remain a permanent fixture on the retail calendar in the short term at least.  Shoppers expect to be offered these pre-Christmas enticing deals and the “genie is definitely out of the bottle” as the retail experts say.  However it seems that the cyber shift is now taking place across the whole event and that multi-channel is more important than ever both in terms of customer experience and expectation as well as profitability for retailers themselves.  Those that were able to get these elements right seem to have come out on top, but for those unable to unite these channels then this may have been a loss leader they could have done without.

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