Black Friday is almost upon us, and pundits are already grimacing over the impending doom that is the economy. Deals being announced left, right and centre. However, there seems to be a bit of trepidation amongst industry professionals as to just how it’s going to play out.
Increased business rates, inflation and the cost-of-living in general has meant that the usual hype surrounding Black Friday / Cyber Monday this year – 24 November – has been significantly more subdued than previous years.
“There are lies, damn lies and statistics – especially when it comes to Black Friday. One thing that’s for sure, however, is that people will be spending a lot less this year than last,” ParcelHero’s David Jinks told us.
While ecommerce has largely held its own in the wake of the pandemic, he predicts that UK Black Friday sales figures will fall from £4.8 billion to £3.84 billion.
“It’s likely overall spending on Black Friday itself will fall by around 15% to £1.7 billion,” he says, adding that “shoppers are also being far thriftier on the long lead into Black Friday”.
“If spending matches Amazon’s most recent Prime sale results, which was distinctly sub-Prime, big-ticket items such as computers and consoles are also less likely to shift in significant numbers although lower-cost items could still do well,” he says, pointing out that customers will largely be looking to make savings on items they’ve had their eyes on for a while, – the law of diminishing returns holding true then.
“Around 57% of items sold in the most recent Prime event cost £20 or less, according to our analysis.”
Less ‘cash to splash’
Many believe that UK businesses also have less incentive to offer significant discounts following the mini-budget wreaking havoc against the pound after Kwarteng’s brief stint as chancellor.
Retailers paid significantly more for goods from the US, Europe and Japan than they did in 2021. Consequently, they now have less wiggle room for juicy Black Friday and Cyber Monday discounts to tempt shoppers.
Black Friday or Black November
General interest in Black Friday has waned in recent years, perceived as an “American thing”, after initially experiencing a boom in the UK.
Commercial prospects of this year’s shopping event have been made worse as lacklustre deals fail to inspire customers already battling rising costs and inflation. Black Friday spending fell to £4.85bn in 2021, from a peak of around £6bn in 2020, according to Finder.com.
The truth is that Black November, as this month is sometimes called, was already on the decline even before this year’s financial crisis,” he says, predicting a further 20% decline in spend this year, with online sales taking the brunt of that hit.
While ecommerce captured around 37% of the entire retail market at the height of Covid lockdowns, that’s now settled down to around 26% of the entire spend. So 26% of a reduced Black Friday market means a lot of online retailers are going to be disappointed this year.”
World Cup fever
In order to combat the declining interest in the sales holiday, many retailers are introducing sales promotions earlier than usual, using the World Cup in Qatar as a platform to drive sales.
According to Bloomberg Intelligence retail analyst Charles Allen, the coinciding dates of the FIFA World Cup and Black Friday explains why some promotions are starting early, especially across electronics (such as TVs).
However, there is also a recognition that consumer budgets are stretched so many Black Friday events are starting early to secure a share of the potentially limited spending. Planning the timing of Black Friday promotions is crucial and could ultimately be the difference between success and failure.
Most durable goods promotions around Black Friday are likely to be planned with products and prices secured well in advance. Retailers in these categories have to make a profit at these promotional moments, so promotional planning is a core skill.
Black Friday and the importance of tech
Integration platform Patchworks’ chief revenue officer Eduardo Silva believes that technology can be pivotal in “pushing the needle” and explains why integration is essential for effective stock management during peak retail periods such as Black Friday.
“At times like this, returns and stock management challenges remain huge for retailers. A retailer’s data is only their gold if it’s fully integrated across all systems and retailers know where their stock is – otherwise it’s worthless.
Silva says it is no longer enough to simply have an integration platform as a service (iPaaS) which connects A to B, or ERP to WMS. He believes that poor stock management is bound to make headlines this Black Friday, ultimately costing businesses in terms of lost revenue and reputation.
“The advent of predictive personalisation software (PPS) will make phenomenal profits for ecommerce retailers sufficiently savvy to have installed it in time. Identifying imminent consumer purchases, that are unique to each individual, delivers the highest ROI in marketing currently, according to McKinsey, Bain , Forrester and Statista, and yet fear of the early adoption of advanced technologies is still the primary cause of commercial failure in the UK”, says Silva.
“To actually know what an individual consumer is about to purchase, and not provoke that sale by sending them an email about that product at exactly the right time, is as good a cause for giving up as any. There are plenty of alternative sources for all products these days, yet those retailers that believe in their own posturing and consumer loyalty, without servicing will have to endure watching their competitors pass them by”.
While there will still be some deals out there for shoppers looking to make a saving, it’s fairly unanimous that this year’s pre-Christmas sales boost will really be more of a small bump, with all signs pointing towards the period being quieter than usual.
It’s not for the want of trying though, with retailers still making a concerted effort to slash prices and attract consumers where they still can, as they look to boost custom as the peak period gets underway.
Of course, how successful they will be is another issue entirely…