Friday 20th Oct 2017 - Logistics & Supply Chain

What will Black Friday bring this year?

While many retailers would love it if we all quietly forgot about Black Friday, the American import looks set to stay for some years yet. Will 2016’s promotions repeat the carrier carnage of 2014 or will retailers succeed in managing consumer demand and expectations?
We may currently be enjoying long sunny days and relaxing holidays, but retail thoughts will already have turned to a darker time of year: that day in November which appears to have become inextricably linked with eye-watering bargains and a day spent frenetically shopping – Black Friday.

Penelope Ody

Penelope Ody

The whole concept of Black Friday bargains in the UK is faintly ludicrous. In the USA, it is the long holiday weekend after Thanksgiving when American families – given a rare day off work – head for the stores to start their Christmas shopping. In Britain it is just another cold, grey, very ordinary November day – or at least it used to be.

As David McCorquodale, UK head of retail at KPMG, says: “It is an unnecessary evil to bring to these shores: for most people it coincides with the last pay cheque before Christmas so is a time when retailers would have expected full price sales.”

In the US Black Friday has been going strong since the 1930s, while in the UK it only arrived in 2010 when Amazon launched a “Black Friday Deals Week”. Walmart subsidiary Asda followed suit in 2013 with a “Walmart’s Black Friday” promotion. The rest is history, with the media full of stories of rioting shoppers grabbing bargains in 2014, followed by reports of failed deliveries and overwhelmed carriers. Significantly Asda “cancelled” Black Friday in 2015.

Last year bargain-hunters seem to have largely stayed away from shops, perhaps to avoid those predicted riots, and preferred instead to buy online, while the Internet deals were spread across a week so carriers found it easier to cope. In 2014, high street shops had been desperate to shift winter clothing after a warm autumn. In 2015, as McCorquodale points out, “the focus was more on electricals”. Retailers, like Dixons, began planning Black Friday offers in the New Year working with suppliers to create cut-price “bargains” and if anyone took a serious margin hit in 2015 it was those same suppliers.

Special offers
So what will happen this year? No doubt the likes of Dixons will have plenty of “special offers” in the pipeline and already numerous web sites are driving “Black Friday 2016” interest – 25th November in case you’d not worked it out – by predicting the sort of deals likely to be around and encouraging shoppers to sign up now for “BF” news come the day. As for the carriers, some already seem to be anticipating daunting demand.

This article first appeared in Logistics & Supply Chain, July 2016.

This article first appeared in Logistics & Supply Chain, July 2016.

Earlier this year Dick Stead, Yodel’s executive chairman, called on retailers to set realistic delivery expectations. “You can’t ask parcel carriers to build up the capacity that’s only going to be used three times a year,” he reportedly said. “Retailers haven’t quite grasped you can’t provide next day delivery at this rate, not this Black Friday, next year or the year after. Reserve next day delivery for people who really need it and for everyone else, for goodness sake, they’ve had the bargain of a lifetime, but it might take 3-5 days to deliver.”

But do shoppers really expect next-day service as the standard norm? Survey results tend to suggest otherwise, with many pointing to a preference for store collection or a timed delivery window rather than next day. If, as last year, the online “Black Friday Week” spreads demand across several days the problematic peak experienced in 2014 may again be avoided. However, one wonders, as they rush to post great new offers on their web sites, how many retailers will also remember to adjust their delivery options to up the price of next day or simply make it unavailable for the BF duration?

Although it has turned in some impressive profits in the last couple of quarters, profit was not one of Amazon’s earlier strategic aims: growth and market share were all that mattered. Thus, next-day delivery has been one of its key promotional tools, while managing its own fulfilment and logistics has also become a strategic priority.
Apparently almost 80 per cent of its UK sales are now handled by Amazon’s own network of 90 or so “delivery partners” – who will now be adding chiller compartments to cope with Amazon Fresh. Here, too, speed is to be a key selling point with orders received by 1pm to be delivered by 11pm the same day, in a choice of one-hour slots.
None of the current mix of online supermarkets offer such speedy home delivery, although some have provided local collection points for same day orders – such as at railway stations for homeward-bound commuters.
Amazon’s emphasis on such a rapid delivery offer does little to help the rest of the industry “manage customer expectations”. With other carriers already seeing diminishing business from Amazon, will they be willing to step into the breach and help out on Black Friday if Amazon’s private courier network cannot cope? Or will they be happy to watch and wait, privately hoping that the chickens will come home to roost?

Logistics & Supply Chain columnist Penelope Ody is a retail market specialist.

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