Retailers await the Black Friday frenzy

MORE than £2bn is expected to be spent online and in store today as the popularity of Black Friday takes root.
 
Black Friday is a US retail phenomena, traditionally marking the day after the Thanksgiving holiday when shops started their Christmas selling period with major discounts.
 
Last year, as it took off here, deal-hungry Brits splashed-out £810m online alone – the equivalent of more than £9,000 a second – and experts predict a further surge in sales this year.
 
In 2014 there were some shameful scenes in store as shoppers scrapped over deals, while online some retailers were challenged both in terms of goods in stock and also fulfilling orders.  While the majority of retailers are offering Black Friday discounts, others are opting out completely.
 
Arguably the biggest name to shun it is Asda – somewhat ironic as the US-owned grocer’s use of Black Friday in 2013 helped bring it to shoppers’ attention.
 
In a bold step, it is now looking to regain shoppers’ attention by not getting involved, as it emphasised the difference between Black Friday’s flash sales on big-ticket, non-essential items and its strategy of “deals on value-for-money, high-quality products that all the family can enjoy”.
 
Meanwhile Visa, the credit card company, predicts £1.9bn will be spent on its cards today, making it the biggest day for spending on this day in history.
 
It expects growth in e-commerce to drive sales, as consumers become more comfortable with using mobiles and tablets to shop on the go. Visa Europe predicts that online transactions will top £721m on the day, up 17% on 2014. There will be a total of 11 million online transactions, up 14.5% on 2014.
 
Kevin Jenkins, managing director UK & Ireland at Visa Europe, said: “This is shaping up to be a huge weekend, online and in-store, for retailers. We’re looking at a combined £1.9bn being spent on Black Friday as retailers discount across both mediums.
 
“It will be a tale of two different golden hours on the day. On the high street, we’ll see a huge lunchtime rush. Online, the commuter hour will see the highest levels of buying, confirming the growing number of people who think mobile first for shopping. Further developments in online and mobile payment security this year should drive further confidence to shop this way too.
 
“Black Friday’s growth is really coming online in particular – that’s where this year’s surge is going to come from.
 
In terms of products, technology purchases are expected to be the most popular, while the likes of fashion retailers will be hoping to entice shoppers with offers for the Christmas party season.
 
Chris Wood, chief operating officer at Barclaycard, said: “Sales of consumer electronics will again prove a key draw for many, with discounts on the latest phones, tablets and TVs tempting shoppers. In a move to avoid a repeat of last year’s scenes, when shoppers stormed stores in the hunt for a deal, online channels will see the bulk of the spending, making it potentially the biggest day of the year for online shopping.”
 
After the problems encountered by some retailers last year Rupert Eastell, head of retail at accountants RSM predicts better planning will help them avoid any hiccups.
 
He said: “I think the winners here will be those retailers that have adapted and learned important lessons from last year, and will use the event as an opportunity to create engagement between new and existing customers. Consumers are already in the shopping mind-set at this time of year, and so retailers should be using special offers to lure consumers through the door or focus them on a seasonal event.
 
“What strikes me as interesting is that several High Street names have refused to take part in Black Friday this year. Whilst these retailers have the scale and deepest pockets and can afford not to be part of the event, I think in the future we’ll see more of the larger retailers quietly opting out.

“This runs parallel with what has occurred in the US where gradually the impact of Black Friday has lessened to the point where the discounting is prevalent throughout the year, and as a result, Black Friday has become almost a non-event.”
 
Sam Fuller, head of consumer at international investment bank Altium, added: “It’s one thing drawing post-Christmas spend out of consumers  through managed discounted lines in the January sales, but quite another when you’re offering the perfect opportunity for customers to get their hands on front line Christmas stock at a discounted price for which in pre-black Friday times they would happily have paid full price.

“There has been some strong talk from major retailers about ignoring the biggest shopping day of the year, it will be interesting to see if they can hold their nerve when rivals start reporting bumper sales.”

Andy Lyon, retail partner at accountancy and advisory firm PwC in the Midlands, said: “Although some retailers have recently indicated that they are reining in Black Friday activity, others have bought in special stock and have no choice but to gallop towards it.

“Given that total seasonal sales do not seem to rise over the Christmas period as a consequence of Black Friday deals, it’s a zero sum game for the industry, with potentially a nasty winner’s curse if you get your margin calculations wrong.”