Black Friday appeals to austerity mind-set

Published: 25 November 2014

The origins of the phrase Black Friday are debatable; some evidence suggests it was first coined in 1966 by a rare stamps dealer. It got its name because so many people hit the stores that it caused accidents and violent scenes between shoppers. Others reference the Philadelphia Police Department in the 50s/60s; here the term was applied to the day after Thanksgiving because of the chaos that ensued in the city as shoppers flocked to the high street sales while spectators travelled to the annual Army vs Navy American football match.

According to Retail Week, the Black Friday frenzy will engulf more retailers than ever before this year with £200 million of sales predicted for Christmas’ busiest shopping day. The trend in shopping habits is focused on thrift and bargain hunting, heightened by the longevity of the recovery. The very existence of a UK Black Friday means the serious discounts and offers are increasingly coming prior to Christmas, which impacts on the significance of the January sales. Are retailers just creating increased revenues in November / December to see a drop in performance in the New Year?

Consumers don’t just search for the lowest price, but have an interest in the best value. A 2013 Black Friday survey shows the same: More than a third (36%) said they are motivated by sales and discounts. However, nearly a fifth (16%) said selection was most important, whilst 14% believed it was merchandise quality. In 2014 the offers are even pre-Black Friday with stores like Amazon, which started the UK Black Friday phenomenon in 2010, launching offers earlier this week with new deals unveiled every ten minutes until 28th November.

The range and scale of retailers increases with Asda, Tesco, Argos, M&S, Amazon, HOF, John Lewis and new participants like, ScS and Hobbs. Interestingly, some stand aside and avoid the discount culture. SuperDry, despite its difficult trading period in autumn / winter 2014, has no intention of joining the frenzy. Euan Sutherland, the new Supergroup Chief Executive and former boss of Co-operative Group, said discounting did not add value in the long term: “Protecting the Superdry brand for the long term is our major focus,” he said. “When the fish aren’t biting then there’s no point in adding further discounts to that.” He added that SuperGroup is instead ramping up its strategy of using outlets to move stock that does not sell in its own-name stores.

Time will tell whether the discount strategy will boost retailer’s profits. - A report by Visa Europe predicts that British shoppers will spend more than £1m every three minutes (or £6,000 per second) on Black Friday this year.

It will be fascinating to see if the IT and channel technology can handle traffic and footfall given the Black Friday principle is truly embedded in the UK retail calendar.

Tamsin Terry-Lush is a Principal Consultant within the Retail Practice at Berwick Partners.

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