Is Black Friday Worth the Effort?
Blog: Software AG Blog - Reality Check
Crowds, chaos and controversy—that is what Black Friday has boiled down to for many shoppers and retailers are now starting to rethink the practice.
Asda, for one, decided to eschew the whole thing this year and did not regret it. “It was the one of the best decisions we’ve made this year,” said chief executive Andy Clarke, citing unwanted leftover stock and the continued pressure to discount after previous Black Fridays.
Asda may not be alone. Several retailers I have spoken to have expressed concern over black Friday events, not to mention the fact that it is costing them a lot of money. Inventory, marketing and advertising costs can eat into precious profit margins, so logic says maybe it is not such a great idea after all. Plus, newspaper articles, pictures and Youtube videos of riots, fights and crowds trampling all over each other do not make for good PR.
The negative publicity from Black Friday in 2014—from fights to crushing crowds—encouraged shoppers to stay away from stores this year, particularly upon opening, and many took their business online. The problem then quickly became crashed websites and inventory problems for retailers, which have stretched the days and weeks that followed.
The chaos from previous years also prompted retailers to extend their deals with themes like ‘Black Friday Week’ and ‘Black Five Days’ in order to reduce the concentration of shoppers on a single day. The danger here is, as Asda’s Clarke noted, shoppers will expect discounted prices for a longer period. Soon they may expect retailers to offer Black Friday-style prices during the entire period between Black Friday and Christmas.
Major issues experienced during Black Friday sales events included inventory problems; where stock has been allocated to stores and does not sell at the end of the promotional period. What do they do with it? Do they mark it down even further, extend the promotion period or run a separate flash sale during December? Shipping it back to warehouses will simply cost too much.
More importantly, after a record online shopping day, can they deliver on the transactional promises that have been made? Are the overall order fulfilment processes sufficiently aligned, streamlined and controlled in order to cope? This is the key new testing ground for retailers. What worked last year may struggle this year.
Black Friday is still a desirable event for many retailers, as previous years’ revenues have proven. But if they are not prepared—with people, processes and technology aligned to ensure that the back-end can deliver against the marketing promises—Black Friday can soon become a thing of the past.
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