Black Friday first arrived in any meaningful scale in 2014. It had a massive, generally negative, impact. Two years is an awfully long time in retail. Today’s market is already quite different. Back then, promotional activity was still something retailers engaged in sometimes, to boost sales, shift stock, and reach out to customers with a special offer. Since then, we have had wall-to-wall price promotions and negative inflation virtually every month in almost every sector.
Last year Black Friday was more muted. The strongest opted out altogether. Many sought to better manage their exposure. Nevertheless, a combination of wet weather and shopper fatigue kept the crowds away from stores and business shifted online. There was a cost hit, partly due to higher staffing in shops that turned out to be unnecessary and partly online, which struggled to meet demand.
I expect this year will be an even damper squib. The main reason is even greater fatigue. After 2 years of discounts, are shoppers really going to rush to buy, knowing there will be more discounts around the corner? My analysis suggests that at the beginning of this week around 25% fewer retailers had launched Black Friday versus last year. And as this week has unfolded, there has been a steady but slow uptake. Each day more are launching but with only a day to go a significant number remain on the sidelines.
Promotions are a key indicator of current trading. Many don’t just hit margins, but brand equity too. Of course if you are concerned the guy next door will discount and capture your customers, what choice do you have? And this is the underlying reality of today’s oversupplied market. Against this background it will be interesting to see who is able to make next year’s price rises stick – will customer buy it?
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