Black Friday – Loyalty should last a lifetime, not just a day

Posted by Sarah Todd

Despite only having been widely adopted in the UK in 2013, Black Friday has quickly established itself as a firm fixture in the British retail calendar. Originally an American shopping phenomenon, it started out as a sales event that took place the day after Thanksgiving and was brought to the UK, unsurprisingly, by US-based retailers: first Amazon and swiftly followed by Asda, which is owned by US retail giant Walmart. UK retailers including Tesco, Dixons Carphone and John Lewis quickly jumped on the bandwagon and the event is now seen by retailers and consumers alike as a key date in a retailer’s calendar. This year alone, Black Friday is expected to generate a staggering £5billion in the UK according to analysts Salmon.

Despite its popularity amongst consumers, research conducted by LCP Consulting reveals that one third of UK and US retail bosses see Black Friday as ‘unprofitable and unsustainable’ and would prefer not to participate at all. In fact, outgoing John Lewis boss Andy Street has repeatedly said that “it is not in the interests of retailers to continue to grow the pace of Black Friday at the expense of other weeks” although ironically, it was responsible for contributing to John Lewis’ biggest ever week of trading in 2015. Ted Baker CEO Ray Kelvin is also against the discount day, saying “We always do our sales after Christmas. We’ve never felt the need to take part in Black Friday and we never will. Firms should concentrate on improving their brand across the year”.

Black Friday certainly serves as a major distraction for retailers in the run-up to the crucial Christmas trading period. The event places huge pressure on logistics and supply chains, and can also risk undercutting any long-term brand loyalty that retailers have worked hard to build up over the course of the year. A big interruption for many retailers, it’s prompted some to opt out of the day completely, and even Asda, one of the early proponents of Black Friday, declared themselves out of the event in 2015, choosing instead to introduce a three-day price cut on fuel.

This is partly a reflection of the way in which Black Friday has evolved since it was first introduced in the UK. In 2014, Black Friday brought with it a huge boost in sales and a high street full of bargain-hungry shoppers. However, despite the positive impact on trading for many retailers, the headlines were dominated by widespread reports of fights breaking out in stores as desperate bargain-hunters tussled over limited stocks of the best deals.

Fast forward to a year later, and we saw a very different story. Deterred by the chaotic scenes of 2014, consumers steered clear of the high street, instead choosing to shop for deals online. For those retailers that had spent months preparing for what might have been the busiest shopping day of the year, many found themselves with store and security staff outnumbering shoppers at times! Although lucrative, the move online brought its own challenges. Several high profile retailers’ websites crashed, unable to cope with the increased demand, resulting in not just customer complaints but more significantly, lost revenue, with every minute of downtime valued in the tens of thousands of pounds.

According to AOL, Black Friday weekend reportedly generated £3.3billion in retail sales in 2015. It was also responsible for the UK’s biggest online shopping day ever. With statistics like that, it’s unlikely that we’ll see the end of Black Friday any time soon. Whether they like it or not, retailers have been forced to adopt the initiative as part of their strategic planning, with many believing that if they don’t participate, they risk losing sales to competitors that do. It’s a commonly held view that many don’t want to be held hostage for what is in effect a short burst of sales, and see it as merely bringing sales forward in a more concentrated way, rather than actually selling more.

As the popularity of events like Black Friday soar, the more bargain-conscious consumers seem to have become loyal to discount days themselves, rather than the retail brands they buy from. Much of this stems back to the recession which forced consumers to become more savvy with their spending habits. This also gave rise to a general trend of mass discounting as consumers became ever-more obsessed with getting a bargain. The timing of Black Friday and its proximity to the festive period, when people are at their most stretched financially, has been one of the drivers in getting shoppers to part with their cash weeks earlier than they would usually do their Christmas shopping.

Now firmly engrained in British culture, Black Friday will remain in the retail calendar, at least for the foreseeable future. But is it really sustainable? It’s hard to ignore the significant boost it brings to the retail industry, but at what cost to a brand’s values and loyalty? It’s certainly not a way to generate long-term customer loyalty, which is ultimately what all retailers are striving to achieve. There are other ways of engaging shoppers in ways that are more sustainable in the longer term. The smartest retailers will find a balance between discount days and other ways to build loyalty such as improving customer experience, more competitive pricing, targeted offers and personalised rewards.

But when it comes to boosting a retailer’s bottom-line, the best strategy is keeping the most loyal – and most profitable – customers happy, rather than chasing the most price-sensitive shoppers whose loyalty will change as quickly as prices on a discount day. After all, customer loyalty should last a lifetime, not just a weekend.

Looking to generate long-term customer loyalty for your retail brand? Contact us today.

Phil Smith, VP Sales and Marketing, Ecrebo

RECENT POSTS