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Black Friday is unprofitable and unsustainable, says a third of retailers: study

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Almost a third of retailers think Black Friday is unprofitable and unsustainable, a new report suggests this week.

The Omnichannel Journey report from LCP Consulting found that 31% of more than 100 UK and US retailers that it questioned alongside a number of European traders, agreed or agreed strongly with the statement that ‘Black Friday is an unprofitable and unsustainable promotion’. Meanwhile, 38% disagreed (13% strongly).

“One third of retailers believe Black Friday is unprofitable and unsustainable, indicating this group has learnt more about the true economics involved.” said the LCP report, “They have moved beyond measuring success according to sales or gross margin and are instead focusing on net margin and profitability in assessing effectiveness.”

The report questions whether the third who disagree that Black Friday is unprofitable and unsustainable have understood the full economic implications of the event. Nonetheless, it concludes that Black Friday, which is this year expected to break the £1bn sales barrier for the first time, is here to stay and that an omnichannel approach is essential in order to make it work for retailers. Siloed thinking and approaches, it argues, do not work as retailers look to meet customer demand over peak shopping days such as these. Some 31% told researchers they have moved to omnichannel, while 38% said they were in transition and 31% remained committed multichannel or pureplay retailers.

Commenting on the report, Graham Barnes, supply director at Argos , said the transition to omnichannel was a hard one. “Prioritising customer experiences over real back-end fundamental capability means you may promise customer experiences that you can’t live up to,” he said. “In our world, for example, the way we have chosen to go after omnichannel fullfilment means that you’ve got to have really good stock visibility, accuracy and infrastructure which you can’t just put up overnight.”

Stuart Higgins, retail partner at LCP Consulting, said: “The retail industry continues to be in flux as it adjusts to the demands of digital commerce and the resurgence of the empowered customer. Omni-channel business models are enabling the winners to drive significant sales and profit growth but those who have not yet embarked on the journey face an uncertain future in the face of growing service expectations.”

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