Black Friday backlash may be on the cards for UK retailers

Friday, 28 November 2014
As Black Friday and Cyber Monday become a fixation on the seasonal shopping calendar, more and more UK retailers jump on the promotional bandwagon in an attempt to win over pre-Christmas shoppers. But the ongoing use of blanket discounting may lead to a promotional backlash, warn industry insiders, which could affect retailers margins and brand value.

Elizabetta Camilleri, founder of SalesGossip online aggregated fashion and beauty service, warns UK retailers could be killing themselves and each other in their haste to attract Black Friday shoppers by offering longer and bigger discounts than ever before.

Although SalesGossip witnessed a 140 percent increase in website traffic over the past three days, due to growing increase in Black Friday and Cyber Monday, Camilleri wonders what the long term effect maybe for UK retailers joining on the shopping bonanza.

“Last year Black Friday hit [a number of] UK stores for the first time. 142 retailers on SalesGossip, mainly national chains, had Black Friday or Cyber Monday deals in 2013. But the transatlantic migration of this shopping phenomenon is killing retailers,” explains the creator behind SalesGossip, which was started in London Business School’s Incubator programme.

"Black Friday is yet another bargain buster in the sales war"

“The retailers are telling analysts that they will sell more stock full price. But in practice this isn't the way they are incentivising customers. Black Friday is yet another bargain buster in the sales war that is forcing retailers to slash prices.”

“This year, on 28 November, a 50 percent increase in the number of retailers offering Black Friday promotions is expected. The margins of smaller retailers and independent stores stocking limited pieces from a number of brands are at greatest risk.”

Even the higher end retailers which in the past appeared to have stayed clear of associating themselves with such retail promotional days in order to keep their value up seem to following in suit, with Net-a-Porter end of year sale attracting so much attention earlier this week, the entire site crashed.

Camilleri believes that this ongoing use of promotional offering will lead to a Black Friday backlash as it will only create more issues within a problematic sector. “Retailers are just taking the cream from the cake, which will backfire on them in the end,” adds the founder.

Independent retail analyst Nick Bubb warns that frequent and ongoing discounting within store could have a negative effect on UK retailers joining in on Black Friday and Cyber Monday. “All Black Friday is likely to do is bring forward business from December, reduce gross margins and undermine consumer’s willingness to pay full-price again before Xmas,” he said to Financial Times.

However, despite these warnings for UK retailers, those skipping out on the retail extravaganza could miss out on an opportunity to kick start their seasonal sale. A recent study from consultancy Accenture found that 82 percent of UK consumers plan to shop on Black Friday and 62 percent on Cyber Monday. Research from Verdict found that 47 percent of UK shoppers plan to purchase a Black Friday promotion, with British women leading the charge, as 61 percent of female consumers expect to make a purchase.

“Retailers see growing shopper interest in Black Friday as an opportunity to encourage shoppers to start their Christmas shopping that little bit earlier,” notes Alastair Lockhart, insight director at Savvy Marketing. “The challenge for retailers will be to maintain momentum after the event has finished and prices return to full price.”

"Retailers can't afford to keep following the herd"

In order to avoid promotional fatigue which could negatively affect margins, as well as brand value for retailers, Camilleri advises UK retailers to try and be more original with their Christmas marketing tactics to get ahead of the curve, as UK “retailers can't afford to keep following the herd”.

“In the last month alone 244 retailers on SalesGossip went on sale, plus 14 sample sales. Holding a one-off event in a non-sale period, or charging full price when other retailers are on sale, is a more effective way to stand out from the crowd.”

She believes that this will lead to UK retailers becoming more creative with their marketing tactics to create a unique shopping experience for their customers, which in turn will win over more loyal and long term customers, rather than the customer who only purchases because of a promotional offer.