Could supply chain issues be causing problems for Black Friday?


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Here’s a single curtain-raiser stronger and more persistent than a child’s countdown to Christmas: London shops shouting in your inbox about Black Friday.

The annual claim that you’ll never see a particular scented candle, extremely large TV, or nasal trimmer for that price again – colloquially known as Black Friday – takes place on November 26.

But amid the supply crisis and mixed results from retailers slashing prices to boost pre-Christmas sales, analysts are warning that the Black Friday trend may be on the downside.

The tradition was only anchored here by Amazon relatively recently, and then quickly replicated by UK retail chains from John Lewis to Curry’s.

“Black Friday arrived in the UK from the US like a tornado and it took a while for that to be understood,” said Clive Black, retail analyst at Shore Capital. “For some, it’s an opportunity to increase sales at the right time, maybe liquidate inventory or gain visibility and market share.

“For others, it’s a nightmare that pushes forward what has traditionally been a higher margin, full-price sales at a lower price – and also puts pressure on the supply chain, causing an overall downturn.”

Bhavik Master, boss of British knitwear brand Paul James, agrees. His company is rejecting Black Friday this year.

“We don’t believe in heavy discount tactics,” he explains. “We believe in fair pricing for our knits up front, so our customers can shop when they really need to buy an item – [Black Friday] contributes to the rise and collapse that many brands are experiencing because it is not a sustainable business model. ”

Among the major retailers, M&S and Next are among those that have pulled out of Black Friday sales this year.

Buyer interest may also decline: Last year, the number of UK shoppers buying Black Friday deals fell 6% from 2019, according to GlobalData analysis.

Patrick O’Brien, UK retail research director for GlobalData, predicts that supply chain issues will see more stores decide not to participate this year.

“We believe that Black Friday this year will not be as important as it was before the pandemic,” he said. “The inventory issues that many retailers face mean they have less excess inventory to move and prices generally go up.

“However, this is still a big event for retailers, and as long as the big guns take it seriously with big discounts, small retailers have no choice but to get involved.

“The problem, of course, is that retailers collectively had better ignore Black Friday altogether, as it erodes profit margins at a time when people are ready to spend, but the competitive impulses of the bigger players make that scenario impossible. “

A buyer at an Asda Black Friday event in 2019

/ Lucy Young

Nicola Parker, manager of online dental store Withasmile, admits she feels “pressured” to join Black Friday, even if it affects the bottom line.

“As a small business, we found Black Friday to be contradictory,” she says. “We believe that customers who have purchased during [the sale] would have bought at full price anyway. On average, the week leading up to Black Friday our sales drop by around 50% as customers wait for the savings.

“But if we don’t have a Black Friday sale, we risk missing out on business for other companies that do. It becomes a bidding war over who can offer the cheapest product.

It’s not just about what’s going on in the cash register, however. Some SMEs see Black Friday as an essential tool for securing data and retaining customers.

“Black Friday is an important time of the year for customer acquisition,” said Oliver Mennell, founder and CEO of luxury candle retailer Neom, which saw sales more than double on the day of the rebate. last year compared to 2019.

“For us, it’s about introducing our brand to new customers and encouraging them to continue shopping with us in the weeks leading up to Christmas and beyond.”

Rob Stothard / Getty Images

It can get expensive. Carolina Paradas-Mandato, Head of Strategic Partnerships at Loyalty App Swapi, says: “Black Friday is an extremely expensive marketing tactic, regardless of the sheer volume of traffic and customer intent. Retailers may find themselves sacrificing their profit margins and incurring a loss instead.

“It’s a volume game for most, so for SMBs it’s a risky time to jump on the bandwagon. In addition, it is difficult to participate in these campaigns just once. Customers get used to discounts.

As we head into mid-November, the average online shopper’s inbox will still be screaming “Black Friday” more repetitively than a self-check with an unexpected item in the bagging area. But as SMEs and large chains accumulate its impact, the phenomenon could be on the way out.

“Calling for an end to Black Friday may be a little premature, but we’ve been through its peak – and most households, businesses and the environment are doing better,” says Black. “Many shoppers have found that more often than not Black Friday was a manipulation that sold them things, often lots of things, that they didn’t want and therefore were not good value for money.

“For SMEs, Black Friday can help their financial performance, but only if it is aligned with the real interests of the shopper and the company. In recent years, it has increasingly served neither.


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