Monday 21st Aug 2017 - Logistics & Supply Chain

On the spike: will Black Friday be a pain in the chain next year?

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MaloryDavies.jpgOn the day after Thanksgiving, the city of Philadelphia in the United States experiences particularly heavy and disruptive traffic.  And that, I am reliably informed, is why it is now known as “Black Friday”. 

And Black it was for some retailers, who simply couldn’t keep up with the scale of the shopping binge in the UK.  It’s estimated that online spending on the day was more than £800 million – well up on the £555m spent last year.

Amazon.co.uk said it had its busiest day ever selling more than 5.5m items (that’s a rate of 64 items a second). Last year, its Black Friday sales were just over four million.

Xavier Garambois, vice president of EU retail, said: “The public’s appetite for Black Friday has been bigger than ever, kicking off the Christmas shopping period in earnest and establishing Black Friday as a fixture on the UK Christmas shopping calendar.”

And Currys PC World said that web traffic was up five-fold. It’s no wonder that logistics systems struggled to keep up. A number of retailers ended up with queues of 30 minutes or more as buyers struggled to place their orders.

And one or two had to put up warnings that it would take longer than normal to deliver goods ordered on Black Friday.

Of course, one of the reasons that Black Friday is so popular with consumers is that there are big discounts to be had. And that does raise some awkward questions for retailers.

Yes, this has generated a lot excitement in the run-up to Christmas – and a lot of sales. But these are low margin sales, and it’s all too easy to lose a customer for good by failing to meet service standards.

So do retailers need to factor in more supply chain capacity to manage this huge spike in the future?

Well, the US experience might be worth examining. There, spending actually fell 11 per cent this year to $50.9 billion (£32.4bn), while the number of people shopping in stores and online was 5.2 per cent down at 133.7m.

The US National Retail Federation puts this down to the fact that retailers are offering holiday discounts much earlier so consumers don’t have to wait until Black Friday. It has also warned that consumers are savvier and know that there will be more deals ahead in the run-up to Christmas.

Will the UK be importing that kind of thinking next year?  I wouldn’t bet against it.

Malory Davies FCILT
Editor

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