Black Friday and the Retail Industry: Boon or Bust?

Julie Palmer

Regional Managing Partner

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Black Friday and the Retail Industry: Boon or Bust?

Updated: 25th April 2020

Assessing the Consumer Appetite for Black Friday

Christmas has always been big business for retailers. Research from Adobe shows that UK consumers are expected to shell out over £2,000 each on food, presents, and celebrating the festivities during the run-up to Christmas.

While Christmas shopping in itself may not be new, the way in which Britain conducts its yuletide purchases has changed enormously over recent years. The advent of online shopping has shifted where we shop, while the recent introduction of Black Friday has changed when we shop, bringing forward the start of Christmas preparations for many.

What is Black Friday?

Heralding the start of the Christmas shopping season across the pond, Black Friday occurs the day after Thanksgiving and is characterised by retailers offering massive discounts across their stores. With many employees being given the day off work as part of their Thanksgiving break, Black Friday can in many ways be seen as the US version of our traditional Boxing Day sales.

Heavy footfall in stores resulting in a spike in takings, led to this becoming the first day of the year when many retailers were able to turn a profit for the year as their finances finally tipped back ‘into the black.’

While established in the US for many years, it wasn’t until 2014 that Black Friday fever swept the UK, resulting in now famous scenes of shoppers frantically racing towards discounted television sets and other cut price electronics in the aisles of Britain’s supermarkets.

While the initial excitement around this American import has tempered in recent years, consumer appetite for the annual event still abounds with 37% of UK shoppers setting aside £200-£300 which they have earmarked specifically for Black Friday purchases.

While it may be true that the build up to Black Friday now induces less in the way of frenzied excitement, there is an argument that this has been replaced with quiet expectation. Consumers now look forward to Black Friday in the same way they look forward to the Boxing Day and January sales, safe in the knowledge that this is now an established annual event guaranteed to happen and guaranteed to bring some tempting discounts.

The popularity of Black Friday

As a firm fixture in the festive calendar, Black Friday represents one of the biggest revenue-generating retail events of the year, responsible for sales in excess of £1.49bn in 2018, up 7.3% on last year. Originally an event for bricks and mortar stores, Black Friday has expanded beyond traditional high street retailers, with supermarkets, online only companies, and even service providers piggybacking on the popularity of the event all keen to take a slice of Black Friday spending. In fact it is estimated that three quarters of retailers will participate in some form of promotional activity during Black Friday.

Black Friday 2019

This year Black Friday falls on the final Friday and final working day of the month, meaning it is likely to coincide with payday for many consumers; retailers will be looking to tempt as much of this money as possible from workers’ paycheques.

Although the timing of this year’s event may be a boon to retailers, in reality, Black Friday is more than just a one day event. Deals are often spread throughout the week, starting on the Monday before Black Friday, and continuing throughout the weekend cumulating in Cyber Monday. It is not uncommon for retailers to start promoting their Black Friday offers as early as the start of November.

"Black Friday occurs the day after Thanksgiving and is characterised by retailers offering massive discounts across their stores."

High Street vs Online

Originating in the U.S, Black Friday takes place the day after Thanksgiving, and sees people trading a day in the office for a day hitting the shops. As a ‘normal’ working Friday in the UK, however, it is perhaps no surprise that a huge amount of sales over this side of the pond take place online as opposed to via in-store transactions. Ironically for an event which, in many ways provides a boost to the retail industry, Black Friday yet again solidifies the dominance of the internet over high street shopping.

The rise of click and collect, however, could lure shoppers back to the high street in the days following Black Friday. Retailers should be prepared to pounce on this increased footfall and use it to drive additional in-store sales wherever possible.

How important is Black Friday to retailers?

Since 2014, Black Friday has gained serious traction in the UK becoming as firmly entrenched in the festive retail calendar as the Boxing Day and January sales, kick-starting festive spending and signalling the start of Christmas preparations for many.

Shoppers now anticipate Black Friday and expect their favourite retailers to take part. This event plays a part in their autumn shopping habits with many putting off big purchases, particularly concerning electronics and large household goods, in anticipation of deals on Black Friday.

This delayed spending can affect Q3 figures which retailers will subsequently be under pressure to make up for during the festive period. Retailers who fail to offer deals on Black Friday risk potential customers simply going to a competitor who is participating, which can have a devastating impact on sales during the all-important final quarter of the year.

How much is Black Friday worth to retailers?

With almost £1.5bn spent during last year’s Black Friday promotions, retailers will be keen to cash in on consumers appetite for splashing the cash at this time of year.

However, while sales figures may be impressive, it begs the question of how much of this represent additional impulse purchases, and how many are simply delayed transactions from the autumn?

Black Friday has completely changed the way we shop for Christmas, meaning that for many retailers, sales which would have otherwise been spread throughout October and November now are concentrated in the last week in November. Likewise the trend is there for people to bring purchases forward from December in order to take advantage of the promotional deals offered during Black Friday.

A Black Friday Warning

Black Friday is particularly suited to those retailers who do not ordinarily discount throughout the year. Even a modest Black Friday discount represents a deal which shoppers feel is too good to pass up.

Prolific discounters on the other hand, may fail to generate the same amount of hype for their Black Friday offerings without seriously slashing prices. A company already reliant on tempting shoppers with marked down prices needs to give serious consideration to whether further reductions is a financially prudent, or even financially viable move. The risk heavy discounting can have on a company’s bottom line needs to be weighed up carefully particularly when every pound counts and finances are balanced on a knife edge.