Is Black Friday more damaging to the UK retail sector than Brexit and the rise of online combined?
I have never made any secret of my abhorrence of Black Friday.
At best, it is the ultimate in lazy and unimaginative marketing. The retail sector collectively shooting itself in the foot.
Far from a ‘sales bonanza’, much more an exercise in damage-limitation. The ugliest face of consumerism amongst shoppers.
At its worst it is a margin-sapping, throat-slitting exercise in copy-cat desperation amongst retailers of epically suicidal proportions. That is my pre-watershed summation, the uncut version is far more damning.
This year’s ‘extravaganza’ is taking place tomorrow but many businesses have been running week-long, or more, Black Friday promotions. Last year, I purposely kept watch for the first Black Friday promotion or advertisement. The first business to launch one? Talk Talk in late October. A telecoms company, a full month before the actual day. So, what was conceived as a one-day retail spectacular is now a protracted period of marketing that virtually every other business sector you could name has hijacked. Proof, if any were needed, of how ludicrous the whole thing is.
“Black Friday is the biggest manifestation of what is harming UK retail most”
From a purely retail perspective Black Friday has evolved considerably in the five years it has featured in the UK. The nadir was definitely 2014, when retailers jumped lemming-like onto the bandwagon and got badly burnt, either counting the PR cost of consumers fighting over goods instore or having to deal with massive supply chain bottlenecks.
We have since seen something of a scale-back, although this is not always apparent in the levels of marketing noise. I would expect the direction of travel of recent times to continue this year – elongation of the Black Friday period (Cyber Monday has effectively been subsumed into a wider two week period), electricals being far and away the most dominant product category and it being more an online than a store-based event (Black Friday itself being a normal working day in the UK, as opposed to a public holiday in its native US).
Retailers basically fall into five general camps. Those that still go for it hammer and tongs (‘Full Embracers’), which tend to be the major players in electricals (e.g. Amazon, Dixons Carphone, Argos). A level down from that are the ‘Desperados’ that offer a blanket (20%/25%) discount across their full range. Thankfully, these are becoming fewer and fewer – how many retailers can afford a 25% hit to their gross margin?
A number of retailers still partake in Black Friday as they are ‘Caught in the Crossfire’, a key one being John Lewis. It is effectively drawn in because of its Price Promise. But most retailers probably fall into the fourth category – ‘Paying Lip Service’ – in it because they think they have to be, make a lot of noise about it but deliver very little. At the opposite extreme to ‘Full Embracers’ are ‘Abstainers’, a camp that includes the likes of Marks & Spencer, Primark, Fat Face, Selfridges and this year, B&Q.
The mechanics of Black Friday have also changed. Whisper it but a lot of the ‘discounted’ product is actually sourced or manufactured specifically for Black Friday. In effect, therefore, its price point isn’t fixed and any flagged ‘discount’ is notional – shoppers aren’t actually bagging themselves a bargain. This may be less damaging to retailers’ margins but is perhaps more damaging in other less quantifiable ways.
A constant barrage of promotions and seemingly continuous discounting are two of the key forces that have undermined the UK retail sector in recent years. And some. Brand equity in retail is everything and constant discounting completely debases this. Price fluctuations send out very mixed messages and confuse consumers. If a retailer doesn’t appear to have faith in its own brand and pricing, why should its customers? Too many retailers are alienating the most important facets of their whole business – their customer base. It is surely no coincidence that most ‘Black Friday Abstainers’ are actually the best performing operators on the high street – retailers that have faith in their brand, know their customers, value them and maintain their trust.
To answer the original question: in isolation Black Friday probably isn’t more damaging than Brexit and the rise of online combined. However, the culture of constant promotion, discounting and associated brand devaluation definitely is. And Black Friday is the single biggest manifestation of what is harming UK retail most.