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Is the Black Friday bubble about to burst?

Posted on 25th November 2019 by Phil Ainley MCIM CMktr

I sht eBlack Friday bubble about to burst?

Christmas is here! Or it feels like it anyway. Decorations are up in most stores and restaurants and have been since the end of August.

Everyone starts to feel like they’re in the Christmas mood, which affects productivity in some workplaces, then when it actually gets to Christmas week, most people are sick of the sight of it and just want it to be over.

But first there’s the small matter of everyone’s favourite event, Black Friday. This year it falls on Friday 29th November.

Black Friday is a tradition, originating in the USA, which has blown up into epic proportions in recent years. As Thanksgiving always falls on the fourth Thursday of November, the following Friday is observed as an unofficial holiday.

Due to many people being off work that day, retailers dropped their prices to entice people into their stores and to kick-start the Christmas shopping season early.

Since Black Friday first arrived on these shores, it has become one of the most lucrative events in the retail calendar. Combined with Cyber Monday the weekend generated £7bn of revenue for the retail sector in the UK in 2018, according to the user experience agency Sigma.

However, it isn’t all good news, as there was a reported 7% drop compared with 2017 for retail stores as many shoppers opted for the ease of online purchasing.

 

Three questions have been raised about Black Friday this year:

  1.  – Have retailers milked the life out of it?
  2.  – Will we see the same sort of deals after BREXIT?
  3.  – Is it sustainable?

 

Deals not to be missed… or are they?

In the UK there is a 28-day pricing rule. This means products must be sold at a price for that time before being discounted, within a 6-month period.

Some brands have taken advantage of this by inflating prices prior to November, then discounting for the Black Friday period in November. This can make the discounts on offer look like huge drops, when in real terms they are actually quite small.

Savvy-shoppers have been quick to cotton-on to this practice and look elsewhere for deals, even buying at different times of the year to get the deals they want. However, the vast majority of us still appear to be easily hooked by what looks like a great deal, wrapped in a brightly coloured sale flash or expensive marketing campaign, but surely that cannot last.

 

Too many emails?

This is a strange point for me, because as I write this article I have not received a single Black Friday (or Cyber Monday) email, it’s November 21st! Yet I know from speaking to friends that they are being inundated with email offers.

As a marketer, I’m quite partial to a well-designed email with a catchy headline and offer, but to receive multiple emails every day from the same source, saying the same thing, now that would simply put me off.

Yet it appears to be the strategy of choice for a lot of retailers offering Black Friday deals. Playing the numbers game in the hope that the message sticks.

 

An unsustainable strategy?

There is a strong case for many retailers and other venders not to get involved in Black Friday, simply because discounting can devalue your product/s. In many cases, the prices quoted only yield slim margins for the vendor and it’s margins that are needed for businesses to survive.

When we as consumers insist on a cheap deal, we only gain in the short-term. In the long-term businesses begin to suffer financial struggles (especially those on our high streets), this affects their ability to pay suppliers and other commitments. Hence why our once bustling high streets are now filled with empty units which were once proud household names.

Some of the UK’s well-known retailers already shy away from getting involved in a sales war, but at the present this just serves to offer an opportunity to other brands to steal the limelight, and potentially some market-share, if only for a brief moment.

At some point, you would expect common sense to prevail to help ensure the long-term future of the UK’s high streets.

Already, some of the UK’s larger retailers are addressing the issue by offering more immersive customer experiences in their stores, rather than simply being “high street shops”. John Lewis are trailing “experience playgrounds” in Southampton, while HMV have recently opened new experiential flagship store in Birmingham, which includes space for bands to perform live. This moves the store away from simply being a “record shop”.

 

Could trade deals keep prices high?

BREXIT could be the key to the survival of Black Friday and Cyber Monday in the UK. If the UK leaves the EU with no deal, then import and export tariffs could well be adjusted to be higher than they are now.

Even if the UK leaves with a deal (if we ever leave at all), it is likely that certain goods that regularly feature on Black Friday and Cyber Monday, such as electrical items, will start at higher base prices than we are all used to as the costs for parts and imports potentially increases.

 

The speculation surrounding Black Friday and the health of our high streets will continue to rumble on for a while yet, and Black Friday will remain a calendar feature while footfall remains higher on that day than on most other days.

However, if there is another significant drop in high street revenues from Black Friday this year, then it could become a watch this space event.

 


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