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PEAK 2022 How discounts and delivery concerns seem set to drive Black Friday spending in the coming week

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Each year, InternetRetailing takes an in-depth look at the peak trading period. In part, that’s because it is most important time of the financial year for many UK retailers. It’s also because shopping takes place at a higher rate in the run up to Christmas, meaning that any changes in customer behaviour are seen sooner and more clearly. 

Discounts and delivery concerns set to drive shoppers in store this Black Friday

Black Friday footfall is forecast to be 12.8% higher across UK retail destinations than it was last year – as shoppers go in-store to avoid stock shortages and get pre-Christmas discounts as inflation continues to rise. Business intelligence specialist Springboard says that footfall will rise by 15.9% next Friday, compared to this, and shopping centres (+20.1% week-on-week) will particularly benefit. 

However, visitor numbers are still expected to be 7.8% behind Black Friday 2019 – with a greater lag on high streets (-9.5% on BF 2019) and shopping centres (-12.1%). Shopping centres will benefit, says Springboard, since shops in those locations tend to be more likely to take part in Black Friday. 

Diane Wehrle, insights director at Springboard, says: “The uplift will be driven by a rise in footfall of +15.9% on Black Friday from the week before as shoppers make the most of available discounts to purchase Christmas gifts as they endeavour to outpace inflation, just announced to have risen to 11.1%.  A further driver of footfall over Black Friday is likely to be potential stock shortages of desired gifts due to increased supply costs incurred by retailers which may limit stock replenishment.  This is likely to provide a greater incentive for shoppers to purchase Christmas gifts early rather than wait and run the risk of their favoured gift being out of stock.”   

Shoppers may also want to avoid the Royal Mail strikes. 

Royal Mail strikes

Royal Mail has been notified that postal workers will not be working on key cyber dates of Thursday November 24, (Black) Friday November 25, Wednesday November 30 and Thursday December 1. 

Julian Skelly, head of retail EMEA, at digital transformation consultancy Publicis Sapient says retailers will need to reassure customers shopping online in the light of those strikes.

“This year, customer behaviour will be driven by the hunt for the bargain,” he says. “The shopping mission – both online and instore – will be very focused on finding good value and seeking out the deal.  This will have a number of different impacts.  The holiday shopping period will likely extend, as people shop early and continue to look for good value right up to Christmas Day.  Budgets will be stretched but shoppers are still looking to celebrate this year – maybe more than ever – and will spend what they can.

“We expect to see more use of credit facilities and BNPL schemes, and retailers that have seamless integration with these services will benefit.  Finally, people still remember the supply-chain challenges of 2020 and are reading stories of imminent disruptions in the press.  Retailers need to reassure customers on the delivery capabilities and anticipate the disruption that industrial strikes in Post Office may cause.”

For Santiago Garcia-Poveda, VP Retail at o9 Solutions, one answer for the future lies in creating a digital twin of operations in the cloud to enable better supply chain planning. 

“Retailers are right to be worried by the strike action at Royal Mail during Black Friday,” says Garcia-Poveda. “In the age of never normal, with ever-increasing supply disruptions amid shifting buying patterns as spending tightens, it is no longer feasible to simply increase inventory buffers to absorb volatility. Retailers need to be able to continuously sense, respond and adapt plans quickly and cost-effectively.

“Moving supply chain planning to the cloud with a digital twin improves speed and quality of decision-making by allowing better interoperability between different business units, dissolving data silos, and providing on-demand scenario planning. Through real end-to-end digital twin capabilities, you can see the implication of the planned reduced capacities of deliveries on specific dates and assess the best alternative response and account for the impact on service levels and cost. 

“The digital twin allows you to make the best decisions on how to react to situations when you still have time to reduce the negative impact through your actions. This means we could expect retailers to react even more quickly to unexpected changes and continue delighting customers everywhere, whilst effectively managing the squeeze on margins.”

Businesses think shoppers will still spend in the run-up to Black Friday

Despite growing inflation – which this week reached 11.1%  – and low consumer confidence, UK businesses still expect shoppers will buy in the run up to Black Friday, new analysis suggests. 

Fintech company and working capital specialist Taulia questioned 150 financial decision makers at large UK businesses between October 10 and 24 and found that only 15% expect that consumer demand will fall as a result of current economic uncertainty. 

Bob Glotfelty, chief growth officer, Taulia, says: “Black Friday has traditionally been the kick off for holiday spending, with retailers opening their doors with huge price reductions to clear shelves ahead of restocking for winter months. Our research suggests that despite the current economic headwinds and soaring inflation, demand will still spike as consumers seek out bargain prices. Balancing greater demand, overstocked inventory and supply chain constraints, retailers face a challenging season ahead.”

Engagement with Black Friday marketing activity on Twitter up

Sprout Social has analysed tweets around Black Friday in the run up to the day (Nov 1 – 18) – and has found that while engagement with Black Friday is up (+2.6% to 155k), compared to last year, the impact of the marketing activity has fallen by 18% to 1.8m potential impressions. At the same time, positive sentiment has improved to 88% from 83% last year. 

Sprout Social also looked at the Shop Local campaign, running counter to Black Friday over the same period, to see what impression that campaign made. It found total engagements of 24k were 27% lower than last year, while potential impressions fell by 41% to 1m. Positive sentiment, however, was higher at 94%, up from 93% last time. 

Delivery demands

Despite continued predictions that shoppers will spend less this Christmas, there are still likely to be strains on the capacity of retail warehouses at a time when staff levels are being squeezed. 

Keith Fisher, president of Honeywell Warehouse Automation, says that research suggests warehouses are now often faced with shortfalls of labour all year round. Adding to that, says Fisher, “the expectations of the consumer for faster delivery, and the rise of ecommerce and flash sales only add to the pressures on warehouse workers throughout the year – creating a situation where any day or week can see similar demand to a holiday period.

“Due to these pressures, warehouse operators are looking for new ways of operating efficiently. If they are yet to do so, warehouses will have to automate processes not only to thrive, but endure the strains put on warehouses during the holiday season. By automating processes, warehouse operators can hope to alleviate the pressures of staffing shortages both year-round and during the holiday period. We are increasingly seeing automation and digital technologies expand into new warehouse operations, from voice-integrated picking robots to automated guided vehicles moving goods between warehouse zones.

“The goal of warehouse automation systems shouldn’t necessarily be to just shift tasks from workers to automated systems as much as it is to scale capacity by augmenting human talent. This includes upskilling and refocusing employees towards higher-level, more challenging tasks, while leaving time consuming tasks to automated devices. In this way, businesses can hope to mitigate the challenges of staffing shortages in the holiday season, and in the peaks in demand experienced year-round.”

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