Has Black Friday lost its gloss?

When Black Friday first emerged onto the scene just over a decade ago, retailers could expect queues out the doors, and on some occasions even fighting in the aisles as consumers sought bargain deals. When Cyber Monday entered the fray, retailers’ websites regularly crashed under the strain of excited bargain hunters.

While these events used to provide a boost across the board, there are now clear winners and losers as Black Friday discounting loses its shape and starts to merge into the Christmas shopping. With marketing and sales events starting earlier each year, is now the time for a re-think?

Pressure on retailers

It has been a tough year for retailers. Again, we have seen big names disappear from the high street, and for those that remain the environment is challenging. Increases in production and supply chain costs muddled with competition from big online retailers are reducing profit margins, leaving leaders with tough decisions to make.

Many larger retailers can afford to discount their products as brands support margins and economies of scale apply. However, it is not the case for smaller independents who have to take the hit. They feel they need to take part in Black Friday to compete, and unfortunately, this is adding to the strain they face in keeping their doors open.

Poor deals result in underwhelming sales

Those retailers who can afford to offer site or store-wide discounts are still doing well, but the deals available on Black Friday are not what they once were. Many offers are only applied to end-of-line items or overstock that were heading to the sales anyway.

As a result, many consumers are left underwhelmed. With the cost-of-living crisis, consumers have been spending more carefully than before too. While Nationwide announced a 2 per cent increase in transactions, Barclaycard transactions were down 0.6 per cent year-on-year, suggesting that consumers were happy to spend, but less comfortable with borrowing than they have been in previous years. This hesitation to spend means that consumers are often only prepared to spend on items they were already planning to buy.

The offers created are typically determined by scale and buying power of the retailer, so while large retailers can offer bigger discounts on more products, small retailers are forced to be more selective, leaving them with a smaller piece of the pie, or with severely cannibalised margins.

To read the published article written by Dan Todaro, Managing Director please visit BDaily