Black Friday: Cannibalisation or Propagation?

I worked in marketing for a leading hospitality business for many years so Black Friday is a term that I have been familiar with for some time. Back then it was an industry term to describe the last Friday before Christmas when typically, we would see the most Christmas party bookings. Since then, much like Halloween and Baby Showers we have taken the lead from our American counterparts. Black Friday has become a day when retailers heavily discount their products to encourage consumers to purchase, giving businesses a much needed pre-Christmas boost. We’ve even gone one step further with Cyber Monday. But does Black Friday actually boost businesses sales or are we simply cannibalising existing sales? In my latest blog I’ll take a look at the benefits of Black Friday vs the potential pitfalls.

Black Friday this year will fall on Friday the 26th of November. So, if you’re looking to capitalise on this day, you’ve not got much time to get your ducks lined up. Last year we spent an estimated £6 billion on Black Friday and Cyber Monday. Forecasts suggest that this year spending will be down by 6% with the average Brit set to spend £275 (finder.com). So why the sudden downturn in projected sales? The easing of lockdown and vaccine rollout may hold the key to the predicted decline in sales. With life almost returning to pre-pandemic status consumers have more demands on their income. Money is getting spent on socialising, commuting and non-essentials. Concerns over supply chains may also have some bearing on consumer behaviour this year.

So, what does this all mean for your business should you engage in Black Friday promotions or hold your nerve and maintain your retail prices. Black Friday has many pros and cons.

Pros

1.      An increase in traffic and sales

Consumers have become savvier due to Black Friday and Cyber Monday and are actively seeking out bargains during this period. Black Friday and Cyber Monday focuses shoppers on a set period of time meaning more sales and traffic for your business.

2.      A chance to offload stock prior to Christmas

Black Friday is a great opportunity to clear older stock and introduce new lines prior to the Christmas rush. This is particularly key if your business is in electronics or fashion.

3.      New customer attainment

Finding new customers can be tricky and costly. Black Friday and Cyber Monday give you an opportunity to get in front of new customers who you can then retain if their experience is positive then they will come back to you.

4.      Incremental sales

Customers are well trained and are keen to purchase around Black Friday. They may be attracted to your business due to discounts however they may go on to purchase full price items.

5.      Fulfilment of orders prior to Christmas

With ongoing issues with delivery getting sales in early may prove beneficial to retailers as you can ensure customers receive their items in good time prior to Christmas.

Cons

1.      Pressure to discount

As I’ve already mentioned customers have grown to expect discounts around Black Friday and Cyber Monday. This may be difficult for some retailers to achieve.

2.      Negative impact on sales margins

Although sales are likely to go up, profits will go down. You need to consider whether offering discounts is actually commercially viable. If not then you may wish to withdraw from offering deductions however, will your competitors be offering a promotion?

3.      Increase in returns

Black Friday can encourage impulse purchases, the problem is whether customers will then return the items.

4.      Overcrowded competitive marketplace

Lots of retailers will be talking about Black Friday so getting your voice heard above all your competition can be problematic.

5.      Delayed sales as customers are waiting for discounts

We’ve all grown to expect discount around Black Friday so teasing customers to purchase outside of this period will be tough. Its likely that you will see a drop in sales running up to Black Friday which will have a negative influence on your bottom line.

The Black Friday and Cyber Monday phenomenon looks like its here to stay despite the difficulties it poses to retailers. Its important to consider all the pros and cons before embarking on discounting your products. The impact on margins is easier for a larger retailer to absorb but for smaller businesses it may prove challenging. But equally the opportunity to acquire new customers during this period is beneficial. The key to success is ensuring that promotions are carefully managed to ensure that margins are protected whilst taking advantage of the increase in customers looking for a bargain.

If you’d like to talk to me about your marketing prior to the run up to Christmas or anything else, feel free to get in touch kiesha@iconmarketingcomunications.co.uk 07979940526.

The Death of the High street – when is cheap too cheap!

The proliferation of the internet has meant you can buy almost everything you need online. This is an ideal scenario for time poor and inevitably cash rich individuals however it comes at a cost. I must admit I do my weekly food shop online and have done ever since the birth of my first son. However, in recent months I have become disillusioned by the poor-quality fruit and vegetables and the larger than desired portions which means high wastage. Not to mention heavily packaged items such as meat and some fruits.

If you pick your own fruit, vegetables and meats you’re likely to pick the best of the crop and exactly the right amount. I’ve recently stopped ordering my fruit, vegetables and meat from my online retailer and have decided to source them from a local greengrocer and a farm shop respectively. Here lies the problem though there are hardly any butchers or greengrocers near where I live. We’ve created a country where it is not profitable to operate these businesses as too many of us opt for convenience.

The growth of courier services has meant you can buy many items online and in some cases, receive it the next day. I’ve even received deliveries from Amazon on a Sunday (originally the day of rest).

**Updated**: I actually received a delivery today on Easter Sunday.

The possibilities are endless in my opinion Tim Berners-Lee has created a beast. But with development comes many complex issues the Royal Mail for example (the original delivery service) has seen a drop-in profit, in November 2017 BBC News reported; “Royal Mail shares have fallen after the company reported lower profits and increased its target for cost savings.

Its shares slid 7.6% to their lowest level since March, and the company was the biggest faller on the FTSE 100, the UK's main share index.” Source. The drop-in profits was blamed on fewer people sending letters and why would you when emails are far more convenient and instantaneous. But the service the Royal Mail provides is personal you often see the same postman ours even says hello when I see him on his rounds. What can be more personal than someone you don’t know who knows where you live?

In terms of advertising the Royal Mail leafleting remains the only way to ensure 100% penetration to any given area when leafleting. This can be crucial if you’re looking to target apartment owners or homes in rural locations.

Other courier services have often left my packages in unsecured places just so they can get to the next drop even when I’m in. The pressure to fit in several deliveries in a narrow time-slot means they often don’t have time for unnecessary small talk or at times even ensuring you've physically received your item. We’ve all heard stories of packages being left in a ‘safe place’ by a courier such as a wheelie bin. I recently received an expensive order of wine which was left in the porch of my block of apartments.

The same can be said for internet shopping yes, it is cheaper and more convenient but it does come at a cost. I recently bought a brand-new swimming costume from eBay it was much cheaper than other ones I’d seen and was exactly what I was looking for so I happily ordered it – what could possibly go wrong? It wasn’t until it arrived that I realised it was shipped from China. Unfortunately, it was far too big so I’ve ended up sending it back at a cost of £7.72! This is bad economics on an item which cost just over £10. If only I’d visited a local store they would be grateful for my business and I could physically see/try on the item with returning it if needed much more straightforward.

High street stores suffer from many setbacks expensive rents, business rates, poor parking for customers, out of town one stop shops to name a few. However, we should support local businesses. After all, if you don’t use it you’ll lose it. I am passionate about supporting local businesses and have a large toolkit of ideas to create the desired results for local ventures. If you’d like to have an informal chat, please feel free to get in touch kiesha@iconmarketingcommunications.co.uk or 01625 533102