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Retailers divided on Black Friday

News, 16 November 2015

LONDON: Top retailers on both sides of the Atlantic are divided on the value of Black Friday, according to a new report which reveals that one third regard the shopping day as unsustainable.

LCP Consulting, a retail supply chain consultancy, interviewed more than 100 leading retailers in the UK and US as well as a number of senior retail executives from leading European retailers for a report: The Omnichannel Journey: balancing customer expectation with business profitability.

The third of respondents who viewed Black Friday as not only unsustainable but unprofitable have learned more about the true economics involved, the report said.

"They have moved beyond measuring success according to sales or gross margin and instead are focusing on net margin and profitability in assessing effectiveness."

But one third also thought the day was good for their businesses. And when LCP looked more closely at the retail archetypes in this group – the study considers four: omnichannel pioneers, omnichannel followers, optimised multichannel/pure play retailers, challenged multichannel retailers – it reported that pioneers demonstrated a high awareness of the economics involved while the followers "have major gaps to bridge in customer and event understanding".

The findings come shortly after Asda, the UK supermarket which was instrumental in introducing Black Friday to the country, announced it was "calling time" on the day.

It has apparently looked at the "true economics" and decided that it would prefer to invest some £26m "in sustained savings spread across a traditional seasonal shop" rather than blowing it all on one day.

"The decision to step away from Black Friday is not about the event itself," said CEO Andy Clarke last week.

"Over the last two years we've developed an organised, well-executed plan, but this year customers have told us loud and clear that they don't want to be held hostage to a day or two of sales."

Commenting on that decision, Amanda Phillips, Millward Brown's head of UK marketing, suggested it was the result of a careful evaluation of how the event would impact its brand.

"Retailers should base the decision on whether to take part in Black Friday, and how to approach it, on the likely effect this will have on the experience delivered to customers as well as the potential for sales uplift," she said.

"Done well, the event can build Christmas sales, but incidents such as people getting injured in the rush for 'hero' products could cause damage to the brand that outlives the short-term boost to revenues."

Data sourced from LCP Consulting, City AM, Millward Brown; additional content by Warc staf