Retail expert, Richard Hyman, believes that, “Black Friday has probably been the most stupid retail import from the USA this country has ever seen.” His less than complimentary views on the discount phenomenon which has become common place were featured in an article that appeared in ThisisMoney.co.uk last week. The same story reported that high street giants House of Fraser, Selfridges and Marks & Spencer are all planning to operate as normal on 23 November, turning their backs on the discounting bonanza which a raft of retailers are still set to embrace on this year’s designated ‘Black Friday’ date.
“But why?”, I hear you cry. “Surely Black Friday is great for customer and retailer alike?”. Wrong. Forgive me for borrowing again from the expertise of Richard Hyman, but as he points out, “To launch a promotion when you are wanting, and needing, to promote your Christmas ranges is very confusing for customers.” He’s right of course, but whilst consumers may be able to live with a little confusion as they snap up cut price products, the negative impact of these flash sales is far greater where the retailer is concerned.
I am not suggesting for a moment that Black Friday will not increase product sales for participating brands on 23 November. It undoubtedly will. But this is not so much a benefit to retailers, as an absolute necessity to ensure revenue targets are hit. After all, it is not a bonus to sell more products for less money – it’s a more labour intensive way of reaching the same goal.
Even if retailers are selling so much more product on the day so as to negate this concern, one must also consider that heavy price reductions and returns very often go hand-in-hand. People tend towards panic-buying in sales, which often results in regret once that ‘too good a deal to miss’ feeling dies down. And even those that keep products will often have bought ten items at the discounted price only to return nine. Suddenly, that sky high revenue on 23 November is not looking so impressive by 23 December.
There are other ways for retailers to make desirable products affordable. Providing customers with a different payment option, such as ‘buy today, pay later’, is a way to solve the problem of returns, and to avoid the need to sell more product to achieve the same revenue. Part of the inspiration behind Laybuy, where consumers pay one sixth upfront with the remaining payments spread over five weeks, was to provide retailers with an escape from these traps.
Black Friday is just one example of the ‘sales spiral’, which has caused damage to so many of the UK’s high street brands. Retailers, beholden to shareholders and financial results calendars, are constantly looking to boost sales. Discounts, certainly in the short term, work to deliver this, but often at the cost of cheapening the brand and damaging reputation. What’s exacerbating this is the fact that retailers get swept up (like water down the plug hole) in the ‘current and direction of the crowd’ – if one competitor is holding a sale over a busy shopping weekend, they all get swept up in that too. Undoubtedly this is one reason why so many high street brands have suffered in recent times.
So I say bravo to the high street stalwarts who are choosing to ‘swim against the current’ this 23 November. It’s a brave decision to avoid the sales spiral when your competitors are embracing it. But, in my opinion, it’s the right one.