black friday 2015

The Battle of Black Friday

black friday 2015

The extent to which Black Friday has been embraced by UK retailers varies as can be seen in the marketing leading up to the 27th November. Some are all out for it, others barely register a whisper, but in terms of pre-battle preparation some appear more ready than others.

Spread betting

Ebay will be launching new deals every day for the week. This spreading of online spending makes sense, keep the customer coming back. The more the customer engages with the retailer the more opportunity there is for the retailer to upsell a higher margin product.

Argos has been running Red Friday, Blue Friday, White Friday ahead of Black Friday, and Amazon have launched the event already, smoothing the sales across a longer timeframe giving space to each promotion and taking advantage of early awareness of offers. It will be a hugely competitive day for electricals retailers in particular with hot ticket games consoles, TVs, tablets and laptops only differentiated by price, depth of discount and availability.

AO.com has also taken the stretched version of Black Friday to its heart, launching ahead of the event with big price messages on big ticket items, new products being launched across the week ahead of Friday and then continuing afterwards too.

Planning

The big scale retailers have planned for the event, cultivated relationships with suppliers to buy at a price that is protective of margin, but there is also operations planning to be considered. IT and logistics management are critical.

argos black friday

Argos website has crashed twice in the last month which does not bode well especially as they are spreading the load. It would be shameful to suggest that Argos did not plan adequately for this event but with all indications pointing towards an even busier Black Friday event than last year, Argos must be working tirelessly to build contingency into its servers.

On the plus side, Argos have bricks and mortar stores to direct customers to for order collection relieving burdens on couriers. Retailers that push click and collect this weekend also create a second bite of the cherry with secondary footfall.

Head in the sand

The question whether Asda have made the right decision to back away from Black Friday is open for debate and won’t be resolved until Christmas trading is reported in January, but we would suggest that a retailer that doesn’t move with the customer, that just says it is too hard, will not do well in the long term. Rather than persuading the customer to come with them, they should be going where the customer is headed. Work with it rather than against it.

made black friday

Made.com and Oddbins have made a parody adverts thanking the USA for some of its exports but rejecting Black Friday saying their prices are the best they can be all day every day. They have taken the opportunity to position themselves as EDLP retailers, but while tipping a hat to Black Friday and using the marketing hype to their own end.

Opportunists

For fashion retailers that have suffered in poor Autumn Winter sales due to warm weather, Black Friday presents an opportunity to clear some stock ahead of Christmas at potentially higher margin than might have otherwise been achieved.

That is not to say it is purely opportunistic for the fashion retailers, Harvey Nichols is using the event to encourage downloading of its loyalty app for deeper discounts, a clever twist to boost post event engagement with customers while clearing older stock.

Elsewhere online fashion retailers such as Marks and Spencer, Asos and Very are creating dedicated pages just for Black Friday. While that helps the customer find what they are looking for the opportunity for add on sales at full margin is lost.

 

We will be watching to see what happens over the coming weekend but we will be looking out for these top 3 things that we believe retailers should be doing:

  • Volume behind the key offers but supported by add-ons that support the margin and mechanics to encourage return visits later in the Christmas season
  • Align Black Friday activity with brand values to remain true to the target customer and maintain customer service throughout
  • Contingency plans at store operations level and infrastructure are robust to deliver against the marketing messages.

If you see any cracking examples of retail excellence or indeed failures this weekend please tweet us, we’d love to know.

black friday halloween

Black Friday – The new Halloween?

Another import from the USA that, like Halloween, many people felt would just go away and retailers chose to ignore for too long, Black Friday is here and does not look like going any time soon. Despite Asda’s scaling back of the operation, somewhat ironic as they were one of the key initiators of it over the last three years, other retailers are embracing it more passionately.

So they should if you look at the numbers: it delivered the biggest shopping day of all at John Lewis in 2014, created a massive spike in both footfall in participating stores and online sales. In fact is eclipses Cyber Monday racking up 180m UK retail site visits on one day, with an estimated online spend of £810M, so when you say no to this, you have to be brave.

black friday 2014

Inevitably it brings some issues, scuffling over cheap televisions at Asda Wembley, shots of fights outside Tesco stores in Manchester merely brings into focus the lack of preparation some retailers had put into handling the event. If you hype something to be the biggest sales day of the year then expect to have to manage some chaos, if not you turn the positive PR into very negative PR. Asda’s decision is no doubt a reflection of this negative PR, coupled with the fact that poorly managed it generates little real profit. If customers rush in to the sales items pick a low / no margin product up and rush out then unsurprisingly the retailer feels a little cheated.

Retailers have been experiencing this sort of “cherry picking” for years in promotional cycles, so they should be better prepared to handle it. If Asda or Tesco had appropriate security, limits on store entrants, displays that were easy to select from and had additional margin positive lines included, then Asda would once again be hyping the event. The fact that they have curled their tail and backed away is either due to a hand on the shoulder from Wal-Mart or a recognition of their inability to operate it successfully.

John Lewis have stated that they are ambivalent about the day, recognising the volume and traffic increase but struggling to keep it margin positive. What a great problem to have, too many customers coming in to see the products, all looking for a bargain! Please let’s not suggest that this is not something that good retailers can turn to their advantage: give a good retailer footfall and they will convert, even on bargain days like this, it just takes a little more thought on product selection, display and advance volume buying.

So what is the future for Black Friday? If retailers handle it more professionally, manage to gain additional footfall and/or clicks towards products that they can make some money on through astute buying and good merchandising, then it is here to stay. We suspect that this will be the case and that those like Asda, who have stated they will invest the £26M on products throughout the season, will regret the decision.

Having an additional sales spike before the big Christmas rush is beneficial to all who participate and leaves those who do not wondering why their stores are empty that day. One thing about retail, not just in the UK but across every country we have ever done business in, customers love a bargain; it’s up to the retailer to ensure that they always get one, and that they make money from it.

Sainsburys sales

Sainsbury’s – time to be bolder

Sainsburys has had a fair ride through the first half of its financial year but the biggest grocery quarter has only just started and the stakes are high. Reporting bland first half interims today we are looking forward to the next quarter to see what direction Sainsburys will take.

We are in part excited, and in part questioning of the logic behind the new format trial. Focusing on the customer shopping mission is a good position to take for larger format stores, but the resulting changes to adjacencies were, well, weird.

Sainsburys has been bold in some ways, the Netto tie up and the format trials compared to the rather staid approach to marketing. Here they need to be bolder and differentiate themselves whilst driving that all important footfall. The Sainsburys Christmas advert is launched later this week but will it be another epic, or will it be lighter and shorter, recognising the shortened attention span of the customer despite liking a good story?

We optimistically thought we might here an update on Netto performance, how Sainsburys can position itself against the discounters, but we will have longer to wait to see if Netto can compete against Lidl and Aldi. Christmas will be a telling period to assess performance and if it is good news, will be a great story for January.

One constant enigma for us is that Sainsburys do not make more of Tu Clothing. They have a real capacity for sales and profit growth, but this is just left on the table due to continuing poor instore execution.

Sainsburys hasn’t yet responded to the Tesco Brand Guarantee yet. We suspect that when a response comes it will be brand values led, sourcing and provenance at the core given the continued success of its own brands.

Is Sainsbury successful because they are doing the right thing or because Tesco aren’t? In our opinion it is more of their own good judgement and on firm foundations sales and margin can continue to build through its third quarter. However when so much of Christmas performance dependent on advertising, store operations and availability, the results are still subject to change.

morrisons trolley handle

Morrisons missing the value mark

If Morrisons is to make up for its first half shortfall they will need to pull out all the stops in Q4 because Q3 was another quarter of lacklustre sales. If we were being honest that is a very long shot, we have seen nothing yet to understand how they are going to drive more footfall into their stores in this most important of all quarters.

A like for like sales decline of 2.6% could have been worse so for that, Morrisons should feel relief. But it does reflect its currently weak proposition in comparison to the discounters who pose the biggest ongoing threat.

The weak spots we perceive are around value and in-store excitement. Morrisons is competitively priced relative to the other Big 4 supermarkets, thanks to the price cuts carried out since David Potts arrival earlier this year. However that has not translated to footfall and sales. The price cuts helped to retain existing customers but did not attract new ones.

What was missing was a bigger value message, in fact they have seemed to have almost scaled back their marketing. Their shops are a bit tidier, a bit more organised with some better pricing in it, but we were expecting a little more, a plan of change that included the customer and the marketing to drive them in. What we have is better retail execution and a better retail operation, things that we would have expected David Potts to deliver.

Morrisons Market Street

Photo by John Angerson

Market Street should convey the quality and provenance of its fresh produce but it falls short. It is front of store and should entice the customer to purchase but the format looks dated even in the most recent store refurbishments. Although the misting machines were dropped, they did add a little drama and modernity which is now lacking.

Morrisons changed Match and More in favour of a ‘simpler’ points programme: spend more, get more points which can be redeemed into vouchers to be spent in store. The conversion of points to pounds though is far from attractive, with the customer needing to spend £1000 in order to earn points for a £5 voucher and looks like Clubcard’s younger and less effective younger brother. The new terms were launched on Monday but we would suggest that it needs to be revisited quickly before the golden quarter ramps up.

morrisons staff

A new initiative to make fresh sandwiches in store to compete against High Street sandwich chains is a further attempt to project a quality image on to its fresh produce. However this just doesn’t feel like a good fit for the supermarket, missing the target customer and in the wrong store format.

Morrisons feels like it keeps missing the mark and therefore has an uphill struggle ahead, more so than it has faced so far this year. Christmas is coming and probably too quickly for David Potts and his team, yet the Morrisons full year profit forecast remains unchanged. They must know something we don’t.


If you feel your business is missing the mark, get in touch and let’s see how we can help you.

 

Omnichannel, stores and stories

Omnichannel has undoubtedly changed the face of retailing, but how can retailers ensure it is used to enhance the in-store experience and strengthen relationships with customers?

Retail Remedy will be attending this Retail IT event where a host of retail experts will be discussing this balancing act and the potential that omnichannel offers retail brands through a selection of stories, case studies and innovative examples.

Our very own Paul Thomas will be sharing some insights into the current trends in Luxury Retail, and will be sharing his top tips to make the most of the omnichannel opportunity. Paul would love to meet you so please seek him out during the breaks to ask him any questions specific to your own business.

Other speakers include author and TV retail expert Clare Rayner, who will inform delegates that omnichannel retailing is now central to the success of any growing retail outfit. Clare is well known for championing the success and sustainability of smaller, independent retailers and suppliers to retail.

Other presentations include innovative ways to drive traffic to your site and in-store, a case study from Intersport’s IT Manager Laetitia Kotsiopoulos, and a focus on how omnichannel retailing provides opportunities for retailers of all sizes, from Retail IT.

Omnichannel, Stores and Stories starts at 2pm with complimentary light refreshments and finishes around 5pm with the option of drinks in the bar and the chance to mingle with fellow attendees. Delegates, should they wish, will also have the chance to experience the latest software solutions from from the event’s host, Retail IT.

There are a limited number of spaces available and we’d be delighted if you and any colleagues could join us. To reserve a place either book via EventBrite or contact Matthew via email at [email protected] or 0208 605 9727. We hope to see you on November 12 at Judges Court, Browns, 82-84 St Martin’s Lane, London WC2N 4AG. Get in touch if you need any further information.