Black Friday: The Story So Far
In 2016, Black Friday falls on 25th November. Ipsos brings you on a tour of the history of this prominent date in the retail calendar, identifies some successes (and failures) along the way, and offers some thoughts as to what the next few years might bring.
Black Friday: its heritage
From humble beginnings in Philadelphia some 50 years ago, “Black Friday” has become a global retail phenomenon thanks largely to the internet and the media.
Today’s sales extravaganza was originally conceived as a one-day bargain bonanza in shops, to be held on the day after Thanksgiving Day in America, designed to kick-start the Christmas shopping season.
In actual fact it only became a national US fixture in the 1990s and only surpassed the Saturday before Christmas Day as the busiest shopping day of the year for Americans in 2005. But since then it hasn’t looked back. In 2011 Walmart controversially opened its stores on the evening of Thanksgiving Day, breaking the midnight curfew for the first time. Today it is no longer a 24 hour national sprint, but a 4+ day international marathon, loved by the media, awestruck by the speed and spread of its advance.
Five steps to success
Every year there are new lessons to be learnt from Black Friday. Getting it wrong can have serious consequences for a retailer, given its size and its profile with the media.
Our top five steps to a successful campaign are as follows:
- When it comes to Black Friday, there is no such thing as over-planning. Determine well in advance what to promote, when to promote and how to deliver in a proactive, managed way, working hand-in-hand with suppliers to avoid nasty surprises and knee jerk reactions.
- Agility is key. Black Friday is a disruptive event where demand is impossible to predict. Social media has the capability to spread news (good or bad) with alarming speed. It can mobilise the shopping masses to descend on the best offers like plagues of locust sweeping through fields of crops.
- Manage shopper numbers entering stores. Overcrowding invariably damages the customer experience and risks grabbing the news headlines for all the wrong reasons.
- Stress-test logistics’ capacity and end-to-end execution. The short window of heavy discounting can create unprecedented demand and all too easily overwhelm the normal running of distribution networks. Black Friday isn’t purely about sales, it is also about timely delivery of those sales.
- Prepare to put crisis management into practice. Operational failures and brutal media exposure can risk damaging reputations if they are not dealt with speedily and effectively.
Survive or prosper?
Black Friday has become a global retail phenomenon in less than 10 years. In most markets sales continue to grow year-on-year on the day as its reputation with consumers and its participation among retailers both become stronger. In the UK last year, for example, John Lewis, the bellwether of British retailing, enjoyed its biggest single trading day ever on Black Friday.
Yet, the story is very different in its country of origin, the United States. There, Black Friday relinquished its title as the busiest shopping day of the year in 2014 and went back further in 2015. There are a number of good reasons as to why Black Friday is losing its relevance in its home of origin:
- The single day event, as originally conceived, has bled into a multi-day one, which has taken the edge off the special excitement it used to generate. Its demise arguably began when retailers pulled it forward into starting on Thanksgiving Day.
- Its inevitable transformation into an omni-channel event has diluted its physical visibility and presence and its sense of theatre and occasion.
- Everyday promotions and the rise of the discounters have diminished the once exclusive nature of Black Friday deals.
- The allure of Amazon’s Prime Day, targeting relevant offers to its most valued customers, directly and personally, is gaining resonance and appeal compared to the blunderbuss mass-market approach of Black Friday.
- Some leading brands, such as Apple, have begun to turn their backs on Black Friday store promotions. This is a trend which will have a huge impact on the popularity of the day if it gains momentum.
The future of Black Friday
If it has a sustainable future, Black Friday has got to become an event that is healthier for retailers rather than bigger for consumers. There is little or no incentive for retailers to make greater efforts if they are purely diluting margins without expanding sales. So, value growth has to feature in the future of Black Friday. This means taking a more nuanced approach, looking to discount limited lines and targeted reductions while enticing customers to explore the fuller range. Amazon has signposted how it has learned from the ills of Black Friday and now presents an evolved approach to its “Prime Day” event: offering the best and most relevant deals to its Prime customers directly and personally. It aims to deliver everything that its customers cherish: offers that people engage with, didn’t know they needed and are tempted by, unrepeatable value and a pain free shopping experience.
The Black Friday proposition must evolve from being a Sales Day under strain, with a mass market, scattergun approach to in-store and on-line offers. To survive, it must become a smooth and sophisticated showcase event that demonstrates the best of a retailer’s omni-channel capabilities. It must enrapture shoppers and provide well-founded reasons to spend in November without diminishing the gifting appetite over the rest of the festive period. Perhaps that’s the means of differentiation – by making Black Friday the event targeted at spending on oneself, as opposed to the rest of the festive campaign when the spirit of shopping is directed at buying for others.
The quest is to be able to fold Black Friday into the overall festive sales and promotion strategy without it dominating the entire plan.
Without evolution, from what we are already seeing in the United States, Black Friday could be expunged from the retail calendar as quickly as it appeared on the scene. Capturing the hearts of shoppers will be futile without winning over the minds of retailers. Like every other promotion, the success of Black Friday boils down to retailers being able to strike a balance between securing higher sales volumes whilst maintaining margins. In markets where this is achievable, and the steps to success are followed, the immediate future of the event looks assured. In markets where Black Friday is more established, striking a new balance may be less feasible and Black Friday may fade from the scene. If any market ignores the steps to success, Black Friday could become as notorious in retailing as the Black Death was in civil history, ravaging the health of retailers and leaving devastation in its wake.
Nothing in retailing is guaranteed for long. It is a fast moving, highly competitive industry, in which today’s hottest sellers are relocated unceremoniously to tomorrow’s bargain basement. Who would bet against Amazon’s Prime Day or Alibaba’s Singles Day from knocking Black Friday off the perch as the world’s most popular promotional event?
