Reference no: EM133540558
Black Friday falls on the last Friday in November and is a growing phenomenon in the UK. Originally a US retailing sensation, it has become so popular in the UK that for some retailers Black Friday has extended not only over the "Black Friday weekend" incorporating "Cyber Monday," but in some cases, periods before or after this. Black Friday now symbolises for many, the unofficial start of the Christmas shopping season.
The importance of Black Friday for UK retailers cannot be underestimated. Last year UK retail sales for the day amounted to £810 mn, whereas this year sales increased by 36% to £1.1 bn, the first time over £1 billion had been spent in one day. Amazon experienced its busiest ever day of UK sales, with 7.4 million items sold, amounting to 86 items every second. John Lewis processed 8 000 items every hour on Black Friday compared to 2 000 on a typical Friday in September.Cyber Monday takings amounted to approximately £843 mn, a 31% increase in sales on last year.
So, is Black Friday too big an opportunity to miss? And if so, why have some retailers expressed reservations or opted out of the day altogether? Asda this year, decided not to participate in Black Friday at all, deciding instead to offer its own set of deals throughout the Christmas period. Could this be due to the backlash of bad press from the previous year, where the store was criticised for poor organisation and security, after customers were fighting over in store purchases?Similarly, Jigsaw chose to boycott the event, believing its brand "stood for something", rather than being subjected to indiscriminate bulk discounting generating little brand loyalty. John Lewis also expressed concerns about the event. However, the retailer felt that it had no choice but to be part of it. With their slogan "never knowingly undersold" and so many discounts offered in the market, this would prove to be a huge pricing challenge for them. Profitability is also a key concern. How does Black Friday affect a retailer's bottom line when clearly some of the purchases made on this day would inevitablybe made at a later more profitable date? This is problematic when retailers, such as John Lewis, make 50% of their profits in the three month lead up to Christmas.
The real retail winners on Black Friday will be those who continue to plan ahead with precision. Although significant, price is not the only factor that influences buyer behaviour. Stock availability, the fulfilment of orders on time and the ease of ordering in the first place affectswhere sales are made. With shopping patterns moving away from the bricks and mortar stores to online or click and collect purchases, customers have little patience with retailers who experience technical difficulties with websites, deliveries or returns. The reputation of aretailer can easily be damaged in a few minutes, with a bad on line experience.
Whether retailers choose to opt in to Black Friday or whether they choose to recognise their most valued customers through personalised promotions throughout the festive period, is an individual choice - but what is definitely clear is that Black Friday has found a fixed place onthe UK retail calendar!
1. Andy Graham, MD at John Lewis, needs to decide whether the business will continue to participate in Black Friday and has requested a SWOT analysis is drawn up. Analyse the benefits of conducting a SWOT analysis to help him with this decision