Is Black Friday the start of ‘the most wonderful time of year’ for retailers?

By Harry Saunders

The retail phenomenon that is ‘Black Friday’ comes to UK stores this week, marking the unofficial start of the run up to the festive shopping period. Originally a US tradition, marking the day after Thanksgiving, the event has gained popularity in the UK over the past number of years, with retailers slashing their prices over the course of ‘Black Friday weekend’ to encourage shoppers to get a head start on their Christmas shopping.

Despite only really featuring in the public consciousness in the last decade or so in the UK, Black Friday continues to stimulate significant year on year growth for retailers. Last year, research from Barclaycard showed spending had increased by 7% in 2017  from  the previous year, and IMRG, the UK's industry association for online retail, also stated that the amount spent on UK online retail sites increased by 11.7% to £1.39bn.

But while vendors can expect to experience a jolt in sales in the immediate term, the event is not without its pitfalls. Retailers have to contend with accusations of misleading ‘deals’, in-store unrest, the logistical issues of meeting online delivery commitments, and the ever-looming prospect of cyber-attack, which has caused some major retailers such as M&S and House of Fraser to avoid involvement altogether. While Black Friday is undoubtedly an opportunity for many retailers, those taking part in it would do well to consider its business and reputation implications before they open their stores this Friday.

Real deals
Perhaps the most common accusation that retailers receive from consumers on Black Friday is that the deals on offer are not quite that. While the hype generated through media and customer communications implies that every deal is worth queuing at midnight for, it has been suggested by some that this may not be the case.

A 2016 investigation by Which? into Black Friday deals found that 60% of the Black Friday deal items were available for the same price or cheaper at other times of the year. It even found that some Black Friday 'offers' in 2015 saw the retailer selling a product for more than its RRP, despite claiming it was a discount. This type of practice is extremely risky for retailers as, when uncovered, it causes customer trust to erode, purely in the pursuit of a bump in sales in the short-term.

In-store chaos
Along with the import of Black Friday from the US came the now infamous television footage of shoppers trampling over each other at midnight to bag the best deals. Indeed, when Asda, owned by US supermarket chain Walmart, staged its own Black Friday sale in 2013, a small riot broke out as customers physically fought over flat-screen TVs.

The incident made national news as an example of the darker side of ‘Black Friday’, and such were the reputation implications that Asda no longer takes part in the event. Any retailer wishing to take part in Black Friday should be aware of this association, and take care to mitigate the risk of any such events in their own stores.

Delivery disruption
An additional consideration for retailers taking part in Black Friday is the pressure they will experience on their delivery networks. ‘Cyber Monday’ has become the digital age’s answer to ‘Black Friday’, and sees the discount period extend into a long weekend, taking an online focus on the Monday.

Aside from the usual peak in orders, Black Friday brings with it additional complications due to changes in the way consumers now purchase online. Fashion retailers, in particular, report a new trend of consumers buying heavily discounted items in bulk, and then returning the majority of them, causing disruption both in terms of incoming and outgoing items for online retailers.

This pressure often also means that customers are not receiving goods within the expected frame. Consumer expectations in terms of delivery have been set by the big online retail giants, with the option of low-cost, next-day delivery now an imperative rather than a nice-to-have, and an inability to meet that expectation on Black Friday could damage perceptions of that company’s ability to deliver on time in the longer term.

Cyber risk
Clearly, cyber security is a primary concern for any online retailer, and peak cash flow moments such as Black Friday represent potential flashpoints for IT teams.

Last year, it was estimated that more than £18 million was stolen from UK bank accounts during the Black Friday period, and such are the public’s concerns over personal data issues that any fraud resulting from a retailer’s security failings is likely to have more negative impact than ever before, possibly resulting in irreparable reputation damage.

Risk and opportunity
Whether it’s ultimately considered good or bad for retailers, the competitive pressure is such that Black Friday is impossible to avoid for most. However, whether online or brick-and-mortar, retailers can’t simply expect to cut prices and watch the shoppers roll in – it’s crucial that they consider the reputation dimensions of their involvement, and have a plan to mitigate some of these possible reputation risks.

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