Black Friday is upon us. The idea that it is good to have a major promotional event in the run up to Christmas is an American one, but while it may have some relevance over there, it is significant that one of the prime movers, the American owned Asda, quickly decided that it lost it money and pulled out.
Asda realised the folly of Black Friday and seems not to have suffered from the decision and, presumably, benefited in profits terms.
No-one has yet come up with a good reason why, when faced with the busiest and most important trading period of the year retailers should deflect spending away from full priced Christmas gifts into low margin special purchase merchandise or cut the price of goods they might reasonably expect to sell at full price in December.
Make it relevant
There seems to be some recognition of the problems and there is an air of damage limitation about the strategies of the last couple of years. Black Friday makes some sense in the US where the last Friday in November is usually taken as a holiday. In the UK it is just a normal working day. So the challenge, if there has to be a promotional period, is to make it more relevant to the UK retail scene.
That’s what the current strategies seem to be trying to do. There seem to be two main strategies:
1. Reduce the number of promotions. This is something that is hard to monitor. But the consumer research for last year’s Christmas Shopping habits report found only a small balance that thought the “promotions were good” – 33% agreed against 25% who disagreed. That will be the benchmark to judge the promotions this year.
2. Spread the promotions over a much longer time period. Amazon is typical with promotions over 12 days.
Of course, spreading the promotional period eases the strain on logistics and it makes the promotions available in-store when most people are able to get to them. They are not really becoming more relevant. What we need to see is retailers pulling back from the whole promotional period and making it less costly.
Who’s doing what?
Most retailers have started early. Amazon is typical. It is spreading promotions over a 12 day period from 14th November. Argos is doing something similar. Tesco started a couple of days later. Some retailers are changing the name of the promotions. Very has its “Black Friday Week”, though we think the promotions are spread over a longer period.
Currys and Carphone Warehouse have “Black Tag” promotions which started on November 19th.
Asda is not taking part and nor, as far as we can tell, is Sainsbury’s, though its new subsidiary, Argos, is a major player. It’s worth noting that a promotion such as Black Friday has to be planned well in advance and many months before the Sainsbury takeover of Argos actually took place.
John Lewis is matching competitors’ promotions, as one would expect, and has its own Black Friday promotion just over the Black Friday weekend.
And the impact?
We have been expecting Black Friday to have less impact this year than last. That may have been wishful thinking, but the evidence so far is that in trying to make the promotions more “relevant” they are actually trying to make it worthwhile.
Richard Perks is Director of Retail Research at Mintel where he advises clients, writes retail reports and presents webinars. Richard joined Mintel in 1999 and oversees the content and strategy of the retail reports. He regularly provides analysis to the global media on retail issues. Almost all of Richard’s career has been in retail analysis and before joining Mintel, Richard worked in the City, both on the buy side and sell side, and as a journalist.
