Black Friday 2016

More retailers run extended Black Friday discounts in 2016 – but others still opting out

black friday online shopping

eBay and Tesco this week joined the trend that is seeing Black Friday become an ever-longer discounting period.

Tesco is extending its Black Friday event over 11 days starting on Monday November 21 and ending on Thursday December 1. That’s up from four days last year. There will be Black Friday offers featuring 650 products in more than 700 stores and online. More than 300 Tesco stores will open their doors to customers at 5am on Black Friday itself.

The retailer is selling the event as a way to take the stress out of Christmas shopping.

Matt Davies, Tesco [IRDX RTSC] UK and ROI CEO, said: “We’re doing all we can to take the hard work out of Christmas and help our customers get everything they need in one place. We’re already offering customers market-leading prices on the most loved toys this Christmas, and now we’re launching our best ever Black Friday event, providing customers with more time than ever before to take advantage of some great deals.

He added: “Christmas is an extremely busy time for customers, but with more products now on sale for a longer period, we’re hoping to take the stress out of Christmas shopping for our customers.”

Meanwhile, eBay [IRDX REBY] has already launched its 13 days of deals, which run up to November 29 and culminate on Giving Tuesday. Its sellers are cutting prices across the electronics, fashion, home and garden categories, with new deals being added every day. Brands on sale include Apple, Microsoft, Sony PlayStation, Dyson, GoPro, Samsung and Lenovo.

Murray Lambell, senior director of trading at eBay UK, said: “Last year consumers spent in excess of £3billion during Black Friday weekend, a sizable chunk of the nation’s Christmas shopping budget. Consumers are now looking for much more than tech deals. That’s why we are championing sellers from fashion and home and garden, as well as tech, so shoppers can enjoy unbeatable variety and choice.”

The two join Amazon [IRDX RAMZ], whose Black Friday sale period started last week.

Vince Kerrigan, strategic solutions manager at brand communications agency Vital Communications, said: “Retailers have been trying to out-do each other this year by getting their Black Friday promotions underway early and extending them over a longer time period in a bid to make the most of the sales opportunity.

“Clever use of promotions encouraging shoppers to download apps and pre-register for advance notice of online deals is an attempt to push online sales and, as we saw last year, in-store promotional activity is less prominent. Shoppers haven’t forgotten the in-store scrambling that took place in 2013 and 2014 and, once again, they are expected to shop from the comfort of their own home or place of work. In particular, mobile purchasing is anticipated to grow significantly this year, driven by more social marketing activity making use of ‘buy’ buttons and growing use of targeted mobile advertising.

“Retailers have been preparing carefully this year to avoid the risk of any potentially-damaging Black Friday fallout. Many have already invested in optimising their mobile-friendly websites and some have also taken steps to streamline online check-out processes and improve imagery.

“Asda’s decision to opt out of Black Friday again this year is increasingly looking like a flawed approach but all will be revealed by profit declarations in the New Year.”

Asda is unlikely to be alone in deciding not to take part in Black Friday. Royal Mail research released earlier this month found that four out of five retailers would opt out of the event – although 45% said they expected to see almost half of pre-Christmas sales take place on that day.

Elizabetta Camilieri, co-founder of Shopological, based at the London Business School’s innovation incubator, argues that Black Friday is an own goal for many retailers.

“The purpose of Black Friday discounts from the retailer perspective is twofold: attract consumer attention and get them to buy from you. This works if the discounts are a differentiator from your competitors But if every retailer is doing it, what was a sales advantage disappears and quickly becomes an own goal.”

That’s why, she says, retailers including Jigsaw, MaxMara and Zara did not join the Black Friday bandwagon last year, instead using approaches such as VIP promotion weekends, rotating discounts on a limited number of items and free courier delivery on instore purchases.

Black Friday has become an interesting “test of game theory”, Camillieri says. She says some retailers have tried to resist pressure to offer deals “but it has usually ended up a game of chicken”. She added: “Retailers have held off until the last moment and folded, capitulating under Black Friday peer pressure as their competitors launched tempting deals. But it’s a loss leader – last year 25% of UK fashion stock was left unsold by January last year.”

But she says that ability depends on what market segment retailers are trading in, their brand power and smart pricing strategies. “Where you are in the market matters. If you are a premium brand you command customer loyalty,” said Camillieri, “and your customers know that finding their size in the January sales is very unlikely. Plus most November shoppers are buying Christmas gifts, so if you don’t offer a Black Friday deal, buyers of your brand won’t hedge their bets holding off until January with the very real risk of winding up empty handed.”

Research has also shown that consumers are rejecting Black Friday. Periscope by McKinsey concluded that 48% of UK shoppers had no plans to take part in the event, and that 42% said it was a marketing trick. Which? investigators this week found that 49% of the products on offer as Black Friday deals in 2015 were cheaper in the months before or after the event. The team tracked prices from leading retailers and says it found that Black Friday was only the cheapest way to buy the item half of the time. In all, only 8% of offered deals were one-day only, and cheapest only on Black Friday.

Helen Slaven, chief commercial officer at digital promotions specialist Eagle Eye said: “The common perception of Black Friday is a period of blanket promotions and heavy discounting, with shoppers competing and literally tripping over each other to get a deal. It’s little wonder that consumer attitudes are becoming more negative. However, there’s more than one way for retailers to get involved.

Looking to shift stock and meet ambitious sales figures not only alienates promotion-savvy shoppers, it leaves retailers vulnerable to website outages, failed deliveries and unhappy customers. If retailers offer the same level of discount to all, loyal customers receive equal benefits to floating consumers just looking around for the best deal on the day. Why would you give away your best offers to this category who may never return to the brand?

Purchases by the blanket technique therefore represent a quick-win with no real long-term benefits. Time and money can be saved by being more realistic; the wealth of data generated by mobile shopping help retailers gain the data to understand what represents a valuable reward for their customer. A strategy for securing loyalty is to offer tiered promotions with the most loyal customers receiving premium rewards. An example might be early access to discounted goods so they can shop in a calm atmosphere, or selected discounts based on their preferences. The key to this strategy is personalisation.”

Mentioned in this piece…

Tesco

Tesco

IRDX: RTSC

Tesco is the largest British supermarket chain. Tesco has a comprehensive multichannel offering, including mobile and tablet websites, click-and-collect options and home delivery. (more…)

eBay

eBay

IRDX: REBY

eBay is a multinational business-to-consumer and consumer-to-consumer marketplace. (more…)

Amazon

Amazon

IRDX: RAMZ

Amazon is a market-leading eTailer with global reach and a broad array of product types. (more…)

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