Retailers step back from Black Friday

Over the last few years, a new phe­nom­e­non has hit the UK retail scene, import­ed from the Unit­ed States. Black Fri­day had its first, ten­ta­tive UK man­i­fes­ta­tion at the begin­ning of the decade, when Ama­zon UK start­ed mim­ic­k­ing its US oper­a­tion by offer­ing dis­counts over the week­end after Thanks­giv­ing.

A cou­ple of years lat­er the idea was tak­en up by Cur­rys and PC World, which adver­tised an online “price crash” in Novem­ber 2012 and, by 2014, thanks large­ly to Wal­mart-owned Asda, the idea had real­ly tak­en hold. Excite­ment about Black Fri­day was whipped up to fever pitch and riots were even report­ed at Tesco stores in sev­er­al parts of the coun­try.

This year, accord­ing to a Periscope By McK­in­sey report, 44 per cent of US shop­pers plan to go Black Fri­day shop­ping online and in stores, near­ly twice as many as last year. In the UK, though, the fig­ure is far high­er at 81 per cent.

“Con­sumer appetite for Black Fri­day in the US and UK has surged this year, with more plan­ning to shop, in more cat­e­gories, with more dis­pos­able bud­get,” says Bri­an Elliott, man­ag­ing part­ner of Periscope By McK­in­sey.

But is this nec­es­sar­i­ly good news for UK retail­ers?

In the Unit­ed States, Black Fri­day boosts sales at a crit­i­cal time and has been described as the day retail­ers begin to turn a prof­it for the year. How­ev­er, as Pro­fes­sor Joshua Bam­field, direc­tor of the Cen­tre for Retail Research points out, US shop­ping pat­terns are very dif­fer­ent from those this side of the pond.

“In Amer­i­ca, they don’t start Christ­mas until the day after Thanks­giv­ing, so their Christ­mas is much more atten­u­at­ed than in the UK,” he says.

As a result, there’s some evi­dence that Black Fri­day sim­ply can­ni­balis­es Christ­mas sales in the UK. It’s cer­tain­ly some­thing that wor­ries UK busi­ness­es. This time last year, a report from LCP Con­sult­ing revealed that 61 per cent of UK retail­ers believed Black Fri­day was unprof­itable and unsus­tain­able, up from 32 per cent in 2015.

Part of the rea­son is the high lev­el of returns, with LCP Consulting’s analy­sis indi­cat­ing that five mil­lion parcels pur­chased on Black Fri­day last year were returned, 50 per cent more than usu­al across the year as a whole.

“The true prof­it impact of Black Fri­day is not dri­ven by sales increas­es and gross mar­gin; it is dri­ven by the addi­tion­al oper­at­ing cost and the com­plex­i­ty of man­ag­ing oper­a­tional peaks,” says LCP retail ana­lyst Stu­art Hig­gins.

Pro­fes­sor Bam­field agrees that Black Fri­day, which falls on Novem­ber 24 this year, is not the bonan­za that many UK retail­ers have been led to expect.

“There’s no evi­dence that it increas­es Christ­mas spend at all. There’s a focus on com­pa­nies offer­ing dis­counts, but no evi­dence that it improves prof­its; in fact, prob­a­bly the oppo­site,” he says. “The prob­lem is that cus­tomers now expect it, and retail­ers aren’t allowed to col­lab­o­rate with each oth­er and say ‘we’re killing our­selves’, so they real­ly are stuck with it.”

Ridicu­lous­ly, there’s a fair bit of evi­dence that even cus­tomers don’t actu­al­ly like Black Fri­day all that much. Last year, a sur­vey con­duct­ed for PwC found that more than a third of Brits weren’t inter­est­ed in Black Fri­day or Cyber Mon­day, with one in sev­en peo­ple say­ing they pur­pose­ly avoid­ed the events.

“Black Fri­day is very much a phe­nom­e­non for C2s, Ds and Es [socio-eco­nom­ic grades],” says Pro­fes­sor Bam­field. “I think that AB and C1s prob­a­bly plan their Christ­mas longer in advance or don’t want to get caught up in the fren­zy.”

This year, PwC believes there will be rather more enthu­si­asm for Black Fri­day, but it remains to be seen whether shop­pers will actu­al­ly fol­low through.

Accord­ing to retail research firm Mintel, one in five peo­ple who browsed Black Fri­day offers last year didn’t actu­al­ly end up buy­ing any­thing, with more than a quar­ter of these peo­ple say­ing they didn’t believe the offers were real­ly gen­uine. And of those who did, more than a third said they regret­ted their pur­chase, indi­cat­ing they may be a bit more selec­tive this year.

“It is like­ly that 2016 marked the peak for Black Fri­day shop­ping,” says Richard Perks, Mintel’s direc­tor of retail research. “Black Fri­day has been a major dis­tort­ing fac­tor in Christ­mas demand over the last few years and there are some signs of dis­il­lu­sion­ment creep­ing in.”

Retail­ers have got to get out of this, and they’re mak­ing it into a longer peri­od and reduc­ing the size of the dis­counts avail­able

When US social media intel­li­gence track­er Crim­son Hexa­gon exam­ined sen­ti­ment about Black Fri­day, it found that in 2010 only 20 per cent of social media posts were neg­a­tive. By 2015, how­ev­er, this pro­por­tion had dou­bled, with most con­ver­sa­tions focused on “anger, sad­ness, fear and despair”.

“I think it was absolute­ly thrilling for the first cou­ple of years; it com­bined the joys of shop­ping with the joys of a foot­ball match,” says Pro­fes­sor Bam­field. “But we send peo­ple round the shops on Black Fri­day, and it wasn’t as busy last year as it was in 2014 and 2015. I won­der whether con­sumers are fatigued by the whole thing.”

As a result, some retail­ers are now attempt­ing to step away from Black Fri­day sales. Two years ago, for exam­ple, man­ag­ing direc­tor of John Lewis Andy Street said he had con­cerns about the effects of Black Fri­day on prof­itabil­i­ty and expressed regret that it wasn’t pos­si­ble to “put the genie back in the bot­tle”.

Asda, too, has stepped back from Black Fri­day, despite being one of the retail­ers that brought it to the UK in the first place, and now says it prefers to focus on good deals all year round.

Oth­ers are attempt­ing to wean cus­tomers off Black Fri­day more sub­tly, by dilut­ing the expe­ri­ence, says Pro­fes­sor Bam­field.

“A week before Black Fri­day, a lot of retail­ers say ‘why wait?’ and many offers on Black Fri­day are still avail­able on Mon­day, Tues­day or Wednes­day,” he says. “Retail­ers have got to get out of this, and they’re doing it by mak­ing it into a longer peri­od and reduc­ing the size of the dis­counts avail­able.”