Black Friday 2021 – Part 2
More disruption? Who needs it?
Since it landed in the UK in 2013 Black Friday has forced retailers to completely rethink the traditional Christmas shopping period and post-Christmas sales. To an increasing extent, those two key periods in the retail calendar have merged into one week in November, when cash registers ring and online orders ping and the bottom line – as the name implies – moves from the red into the black.
This disruption, however, goes beyond the effect Black Friday has had on the retail calendar. It applies to stock management, fulfilment, logistics, staffing, advertising – creating a spike that is hard to predict.
And this year it is harder than ever. As covered in Part 1, consumer behaviour is being disrupted by a variety of socio-economic anomalies, resulting in a predicted fall in spending this Black Friday, compared to pre-pandemic levels.
In this part, we look at the factors influencing retailers’ Black Friday strategy this year.
Uncertainty over stock and labour
Port closures, driver shortages and administrative complications (for example, new customs requirements arising from Brexit) have played havoc with supplies this year. Back in the summer it was clear that certain goods would be in short supply this Christmas, particularly electronics and toys, but generally anything coming from South-East Asia.
These shortages, coupled with the resultant escalation in shipping costs, have made retailers cautious about ordering stock for Black Friday, knowing that it might not arrive until after Christmas. This is further influenced by the knowledge that labour is in short supply – will your 3pl be able to staff up as required to handle the increase in volume?
Any Black Friday strategy depends on being able to stock up, restock and despatch rapidly in order to meet the spike in demand and for many retailers that is simply not an option this year.
With shipping costs having more than doubled and the cost of diesel hitting a record high, retailers will be understood for deciding this is not the time for a discount bonanza. Indeed, the trend is towards prices rising, with inflation forecast to top 4% by the new year.
Some good news for in-store retail came in the Autumn Budget, with the announcement of a 50% cut in business rates for bricks and mortar outlets. This may be enough to give some retailers the confidence to discount now, although for those that also sell online, the likely introduction of an online sales tax looks set to negate any saving on business rates.
Rather than add to the price volatility, there are indications that many retailers will be going small on Black Friday and putting their efforts into attracting a more consistent flow of customers throughout the pre-Christmas period.
One of the retail phenomena that has arisen during the time that Black Friday has taken place in the UK is the ability to target customers with online advertising. Gathering data from platforms like Facebook to enable personalised ads to be targeted directly at individual consumers has become a key part of the Black Friday strategy. A customer who has looked at an item can be persuaded to come back and buy it in the Black Friday sales.
A recent policy change by Apple, however, means that “tracking”, as they call it, is no longer permitted unless the customer opts in. As well as putting an end to personalised ads for iOS14 users, this also limits the ability to measure the performance of campaigns.
Without these tools to promote their Black Friday deals, retailers will feel they have less control to manage their strategy and drive the traffic they need to make it worthwhile.
The lingering impact of Covid-19
While society has “opened up” considerably since lockdown was lifted in summer, there is still some reticence over mixing in large crowds – sales shopping being a case in point.
With retailers safeguarding their staff, as well as trying to second guess consumer behaviour, many are deciding to give Black Friday a miss in-store this year. According to research by Emarsys, 46% of global retailers will not be running in-store promotions this Black Friday.
Black Friday has become a big deal for retailers over the last eight years, presenting an opportunity not only to bolster turnover but also to attract new customers and build brand loyalty. That opportunity will still be there this year; it’s just a question of how best to embrace it.
The uncertainty over stocking up and staffing up, together with the threat of Covid-19, looks set to reduce Black Friday activities in-store to a fraction of their pre-pandemic levels. As we saw last year, Black Friday can work very successfully as an online event, although the constraints on personalised advertising will give retailers something new to think about.
As Black Friday approaches, the signs are that it will be much less of a spike this year and that the focus for retailers will be on re-establishing stability and consistency over the Christmas period.
Coming soon – Part 3: Stocking up for Black Friday? Is your 3pl prepared?