Black Friday - Friend or Foe?
Black Friday was brought over to the UK from America by Amazon five years ago as its customers began to realise that the US shoppers had the best deals.
In the UK, Black Friday had been led by the three A’s, Amazon, Apple and Asda Wal-Mart. Five years on and the phenomenon has really taken off. But is it a US import that will prove as disastrous to our native habitat as the Grey Squirrel and Mink?
The UK retail market has been seeing a shift in shopping habits away from bulk buying and towards more targeted smaller spending sprees both on food and non-food goods. Overall people’s spend per head remains stable but we feel more in control of our wallets.
Traditionally in the UK winter sales were an opportunity to work off the Christmas pudding with a trip to our local town centre on Boxing Day. So how much of a shift in shopping habits have we seen in the last five years, how much of it is driven by the US and what is the impact upon our retail market?
Black Friday sales now out strip those on Boxing Day in the UK but we can’t help feeling that it is a move that is driven more by the retailers than the customers.
Gap were once the most successful fashion retailer in the world but they went through five successive years of decline between 2004 and 2009. The root of their demise? Their policy of indiscriminate discounting that previously drove footfall had stopped working. Rather than attracting new customers the frequent sales became a ‘drug’ for their customers who built a habit of never paying full price for items.
This is a pattern which was echoed across the retail market. Aided by improved intelligence about how we shop thanks to store cards and internet shopping, savvy retailers learnt from the increasing move towards sale shopping and invested in more targeted marketing and sales initiatives.
Sale periods have been reduced and their timing less predictable. Retailers have also given greater incentives for people to spend their hard earned pound of full price items by introducing more celebrity endorsements. A good example of this is celebrity ‘designed’ capsule wardrobes – Gok Wan for TU Clothing, Kate Moss at H&M, Kim Kardashian in Dorothy Perkins, Pixie Lotte in Lipsey, which would be excluded from flash sales.
Evolution of Black Friday
Whilst Black Friday has become a predictable date in the retail calendar the nature of its offer and its duration has proven an unpredictable beast.
Last year Black Friday brought an upsurge of visits to stores which caused issues for customers and retailers alike but this year both have learnt from the stampedes and evolved together.
Compared to 2014 Black Friday 2015 has seen footfall in stores drop by 4.5% and online spend increase by 36%. Some retailers, such as ASDA, opted out altogether, while others chose to discount only selected items or spread the impact by lengthening the sales period to a week or weekend.
In the modern age where time is in short supply and convenience is key multi-channel retailing has become an essential tool for shoppers. John Lewis celebrated their best ever trading day on Black Friday this year but sales were mostly driven by e-commerce, causing their website to temporarily crash.
The Rise of E-Commerce
But the role of stores has not been negated by the rise in e-commerce. Previously un-popular, the more recent rise of ‘click and collect’ has ensured that stores still had their part to play in the Black Friday sales rush.
For the likes of Ikea, who have been struggling to gain planning consent for their ‘Big Box’ format the rising popularity of click and collect is providing them with light at the end of the tunnel. They are trialling a smaller format of store, the first of which opened in Norwich in November with a second planned for Aberdeen in the Spring and a third is under consideration for Oxford Street. This move could ensure their brand remains a fixture in the changing UK retail market.
The rise of the internet in the retail market is not purely focused on the non-food offer of our high-street, more shoppers are also predicted to carry out their big ‘Christmas food shop’ online as well. IGD estimates that £1.2bn of grocery sales will be generated online during the Christmas trading period. People are becoming increasingly more ‘expert’ at hunting down the best deals so spend is likely to be spread across a number of stores and formats.
For example, the rise of the internet grocery shop has not yet spread to discounters Aldi and Lidl. They both have slick websites which clearly promote their in-store low prices but have no option to buy online or click and collect.
Despite this absence of an online option, seven out of 10 people are predicted to shop at the Germanic duo over the Christmas period, capturing an estimate £1.7bn of the £20.3bn spend (say IGD).
Black Friday - Ally of the Modern Shopper
Turning back to Black Friday, it is undoubtedly a phenomenon which is here to stay but it is one which is adapting in line with the UK and indeed global retail market. Rather than it being a pure ‘we want what they have’ result of looking over the pond to the US, in our view it is a marketing strategy which fits with the evolution of the retail world as it sits alongside the digital boom.
A by-product of both the global recession and the rise of multi-channel retailing Black Friday feeds our age old desire to have new shiny things for less and will continue to do so for years to come. So far from being a nail in the coffin for UK retail traditions, it merely the next phase of the retail journey.
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