Black Friday: A Profitable Business Model for Retailers?

by securedatamgt | 27 Nov 2015

Black Friday

It would seem shoppers have not forgotten the scenes of carnage from last years Black Friday sales. Images of shoppers wrestling over plasma screen TVs and hoovers were broadcast across the nation, and it seemed for a time Black Friday’s stay in the U.K  would be a short one. However, it has returned again to the U.K this year, although some of Britain’s largest retailers have decided not to take part.

This Black Friday has been decidedly quieter compared to the turmoil of last year, with most customers choosing to do their shopping online. This move is probably a result of those scenes of chaos, with consumers preferring to search for deals in the comfort of their own home, rather than risk facing crowds of eager bargain hunters. A number of websites crashed last year over the Black Friday period, so staying online does not always equate to a stress-free shopping experience.

Nonetheless it is estimated that over £1.07 billion was spent online in the U.K during Black Friday this year, which is the most that has ever been spent in one day online. Evidently, retailers were not expecting such a significant online demand, with many stores still choosing to open early on Friday in expectation of large queues of customers. This decrease in shoppers is also due to the fact that some retailers are now choosing to extend the Black Friday event over a couple of days so that the mad rush is avoided.

The UK & Black Friday

The question is: will the event continue in the U.S tradition, or will an entirely novel – and slightly subdued – version taken over in the U.K? Already the signs are suggesting that the U.K is remodelling the whole event to suit its own consumer preferences. Spreading it out over a few days and focusing on online sales are just two of the ways in which the Black Friday tradition has been altered to U.K consumers’ tastes. Some superstores have also decided to focus their sales on everyday items, such as fuel and food, rather than luxury items and potential stocking fillers. Once again this would suggest retailers are trying to shape their sales according to British shopping habits.

In the U.S the national Thanksgiving holiday means that a lot of consumers are not at work on Black Friday and are able to visit their favourite stores in person. The sight of Americans sleeping in tents overnight outside shops is a common occurrence, but in the U.K such dedication is just not viable if you are faced with the nine am commute the next morning. Most of Britain will be at work on Black Friday. The only way to get access to the best deals is via the net.

The custom of Black Friday is far more established in the U.S. For some queuing for Black Friday deals after their Thanksgiving meal is just another holiday tradition. In the U.K the novelty of Black Friday means that many continue to ignore it and regard it as a uniquely American event that retailers have imported for profit.

A Lack of Profit?

Although Black Friday has been borrowed from across the Atlantic U.K retailers have had to tailor their sales to U.K consumer habits in order to make it more lucrative. Despite this accommodation there are still suggestions that as a business model the Black Friday event is not particularly profitable for U.K retailers. A lot of consumers that shop on Black Friday tend to purchase Christmas gifts and so this means a retailer can expect their profits in December to be smaller. The Black Friday event doesn’t necessarily change how much consumers buy, just when they buy it.

This lack of profitability hasn’t been lost on retailers; research by LCP Consulting has revealed that a third of U.S and U.K retailers believe Black Friday is unprofitable. This is perhaps why some of the leading retailers in the U.K have decided to abstain for this year’s sales, such as Asda, which has only cut the price of petrol.

For now Black Friday is here to stay, but it is likely that in the future the event will move away from the American model and retailers will continue to focus their efforts on their online sales. The carnage of last year will not be tolerated by U.K consumers again.