MAster Artwor WRI

This weekend, many people will receive their last pay check before Christmas and retailers know it’s the perfect time to grab some of their hard-earned Christmas cash with unbelievable Black Friday Bargains, but is this American marketing idea doing more harm than good for UK businesses?

Doubtless discounts of up to 70% off will entice shoppers. High streets retailers expect a lunchtime rush tomorrow. Tesco will bring in extra security and staff, and online spending is likely to peak first thing.  Shoppers and retailers alike will be scurrying around, no one wanting to miss out.

However, investment bank, Panmure Gordon Ltd, analysis shows that following Black Friday last year many high street retailers lost out on sales during traditional peak times. High street footfall dropped 3.3% the week following Black Friday, and Boxing Day sales showed a 12.6% year-on-year decline.  So, are retailers falling into the trap of chasing turnover rather than profit?

It would be wrong to point the finger of blame solely at Black Friday; the high street vies with e-commerce for sales on a daily basis, and daily deal sites compete in the discount arena 365 days of the year. However, there is little doubt Black Friday does have an enormous impact on retails sales at this time of year. Visa Europe’s predictions illustrate this, they are forecasting Black Friday shoppers will put in excess of £1.9 billion on cards, perhaps it may even top the £2 billion mark!

As every business should know, selling discounted goods impacts on margin. Done properly, and as part of a marketing strategy, it can increase your overall profit, however many retailers appear to be participating in Black Friday because everyone else is doing it.  We see little evidence of this being part of a long-term marketing plan. In a similar vein, we have experienced many instances where businesses have pandered to the daily discount deal culture only to become completely unstuck when the longer-term effect kicks in.

Interestingly, mavericks Apple didn’t offer Black Friday discounts. It’s speculated that they will refrain again this year. Some other businesses are actively boycotting one day sales, others are offering weekly Friday deals; these businesses appear to be taking a much more calculated and sensible approach to their marketing.

The truth is, many businesses rely on the boost of Christmas sales as a buffer for quieter months will ultimately fail because they don’t make any profit at the time of year when most people are spending money! Therefore, Black Friday may just be leading to a bleak future for many.