Black Friday – The Ghost of Christmas Presents? - Fresh Egg Blog

Black Friday – The Ghost of Christmas Presents?

Head of biddable media

Today sees the return of the retail frenzy that is Black Friday. Over the Black Friday weekend in 2015 £3.3bn was spent by UK consumers - an increase of over 25% on 2014, and spending in 2016 is predicted to grow. For some retailers, though, Black Friday has been months in the planning and the event actually started more than a week ago. Many online retailers have been using extended Black Friday deals, spacing out the event over one or even two weeks. This makes great sense; it reduces the load on website servers and enables a far more structured approach to promotion and discounting, reducing the element of chaos that Black Friday creates (cue images of people fighting over TV’s and flooding through shop doors). But what could this be doing to shopper behaviour, especially in the run-up to the Christmas shopping period, the highlight of the retail calendar?

Shopping

Black Friday first started way back in 1936 in the US - the day immediately after Thanksgiving Thursday that marked a natural point for people to start Christmas shopping. As people were off work for Thanks Giving, the crowds and traffic congestion led some police departments referring to the day as Black Friday – which has stuck. Now an established, although recent, addition to UK retailers key sales period, Black Friday has well and truly landed in the UK as it is not only a chance for shoppers to grab a bargain but also, for an increasing number of consumers, marks now marks the start of our festive shopping.

Extending the event - Black Monday to Friday

Amazon introduced Black Friday to the UK back in 2010, and has been leading the online charge ever since. Amazon takes great care to ensure that their systems and delivery capability are proofed for Black Friday, a step ahead of everyone else. This year Amazon started Black Friday messaging and discounts on the 14th November. Search trend data tells us that interest for Black Friday deals begins in October, and Amazon has reacted to this by spacing their deals out over an extended schedule, with different deals on different days (very clever). Not only does this prolong Amazon’s engagement with its customers, but it spaces out the demand and makes it easier for Amazon to meet demand in a way that improves the customer experience.

Black Friday is pulling festive shopping even further forwards

According to the National Retail Federation, 40% of shoppers begin their festive shopping before Halloween, and another 41.5% will start in November while just 18% are starting in December - a figure that is likely to decrease as Black Friday really establishes itself as more than just a day of frantic activity. The Christmas Creep may well be accelerated thanks to Black Friday. David Blunkett recently called for a moratorium on Christmas advertising, with no Christmas ads to be delivered before December 1st. There has been growing sentiment that Christmas starts too early. Selfridges opened their 2016 Christmas shop in August, mainly due to tourist demand. Black Friday gives retailers the ability to bow to potential public opinion about Christmas being promoted earlier each year and still enjoy a shopping bonanza, possibly two!

Does Black Friday affect share of wallet?

As much as all of this spending is a dream for retailers, there’s another side to this coin. Households only have so much to spend outside of borrowing, even then loans and credit cards need to be paid back. According to the Bank of England, 2015 saw £1.5bn borrowed by families in November, much of that is likely to cover the cost of Christmas… and now Black Friday. We can assume that even with this lending, the average household wallet for Christmas shopping has a finite size. So with more deals in November due to Black Friday, the traditional spending period through December is likely under threat as family budgets are being spent earlier.

But we live in a constantly discounted world so are their actually bargains to be had?

How many sales do you see in a week? Sometimes it feels like the world is permanently on sale. Actually, that’s not far from the truth. High street retail accounts for around 20% of UK GDP. Retail is a competitive and saturated market, and the predominant way for most retailers to stand out has been by discounting. A UK Discount Pricing Strategies report by Planet Retail shows that 10% of retailers derive half their annual revenue from discounting events. UK retailers will lose an estimated £38bn in potential revenue because of discounting. In 2015 discounting cost the UK economic output an estimated £20bn.

Extending discounting period is only going to make UK retail that much harder. It’s no wonder we seem to be losing high street retailers so often.

Why not do Black Friday a little differently

Not everyone is engaging with Black Friday in a discounting fashion, though. FatFace have a refreshing take on Black Friday. Rather than providing discounts as an incentive for Black Friday shopping, FatFace are donating over £100,000 of their profits from Black Friday purchases to local charities. In a price conscious retail environment FatFace are bucking the trend, sticking to normal pricing and turning Black Friday on its head. We say “Good on ‘em!”.


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