Avoiding the Black Friday Blues

Martin FirbankBlack Friday is now an established, annual occurrence in UK retail calendars, when bargain hunters from across the country try to grab themselves a great deal. Head of retail at PKF Cooper Parry Martin Firbank looks at the challenges and opportunities for retailers in the run up to the busiest trading time of the year.

THE last weekend of November in 2014 saw shoppers spend more than £850 million during Black Friday and a further £650m during Cyber Monday. It is anticipated that this year’s day of shopping frenzy will see over £1 billion worth of sales, with a 15% increase in activity.

As a result, there has been considerable debate between the pro and anti-Black Friday camps over whether it is the right strategy for retailers to gamble with their profits, particularly in the run up to their most profitable period of the year.

Reducing margins and incurring costs can easily destroy the benefit of big jumps in sales, as there will always be the lingering question about whether they should have sold the same goods at a better margin over a longer period of time.

Supermarket Asda, which is owned by US giant Walmart and was one of the leading players in bringing the Black Friday phenomenon to the UK, announced earlier this month that it will be scaling back its promotional activity during Black Friday.  This was due to the potential disruption to trading.  While this might come as a surprise to some retailers, others may be relieved, knowing they are able to do the same.

Nevertheless, some retailers including Shop Direct have announced they will be hitting Black Friday hard this year and logistics businesses including Hermes, DPD and Yodel have made significant investments in their infrastructure and delivery teams.

A key challenge for retailers to overcome during Black Friday is to ensure that the weekend is a positive experience for customers. By clearly setting expectations, they can avoid panic and mayhem, which could ultimately lead to the devaluing of their brand and loss of consumer trust.

Retailers need to have a clear strategy, including the message they send out and the offers they advertise. They need to work closely with their supply chain partners to ensure a strong delivery management platform is in place and has been stress tested before the demand hits. Websites, point of sale systems, supplier relations, stock ordering, management and delivery services are all key elements to making Black Friday a success.

Supply chains are also becoming more flexible and agile, with a greater choice over pickups, drop offs and deliveries. While it may not be possible to achieve same day delivery during this busy period, setting a realistic and achievable expectation is a much better strategy to build trust and credibility with customers.

With this in mind, it seems clear that the retailers who have a clear plan of what they want to achieve and how they will manage their customers, are going to be in a much better position to benefit from their bottom line profits.

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