Birmingham City University retail expert, Professor Chris Edger, comments ahead of this week’s Black Friday.

In 2010 when Amazon transported its Black Friday promotional mechanism from the US (a huge promotional sales day the first Friday after Thanksgiving which kick-starts Xmas shopping) it reaped first mover advantage, its 300 cut-price deals securing 4 million orders; the biggest day in its sales history in the UK. In 2013, Asda part of the US-owned Wal-Mart Group ran with an aggressive Black Friday promotions day, selling more televisions in a few hours than they normally did in a month!  This year – in advance of Black Friday on 28 November – other major retailers have climbed onto the bandwagon advertising aggressive on-line and store-based promotions including John Lewis, Sainsbury’s, Tesco, Dixons, Argos etc. Mintel estimate that it will be the biggest internet sales day of the year so far, generating £200 million of sales.

But who benefits from this great promotional bonanza? The customer, obviously benefits with January sales-type pricing allowing them to ‘fill their boots’ and gorge on super-cheap pricing (particularly with regards to electrical and white goods).  But what about the retailers? After the erosion of first mover advantage –  where the first few retailers take share from their competitors, shoring up margin decreases with increased volumes – when everyone steps in to ‘get a piece of the action’, it turns from being an expansionary into a defensive exercise for retailers. The US experience provides a cautionary tale. An article – ‘The Curse of Black Friday Sales’, published on 23 November in the New York Post – highlights how the big ‘promotional pop’ on Black Friday has been extended to ad hoc sales promotions days throughout November, rendering the mechanic  ‘ineffective’ and ‘dysfunctional’ for retailers. Indeed, Amazon – setting the trend in the UK once again – has already started its ‘run-up’ promotions to Black Friday on Monday 24 November!

So how useful is Black Friday to retailers? Defensively it will become a must – unless companies want to lose market share to their rivals. However, based on the evidence in the US, Black Friday will become a ‘vampire retail squid’ – spreading out throughout the month sucking margin out of November trading! The margin consequences of this move – as consumers become addicted to November discounting and expect it as a matter of course – could have grave consequences for profitability over the longer term for some retail players. Although, once again – those organisations with efficient click’n’brick and on-line models – will benefit more from the November ‘feeding frenzy’ than those that don’t!

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Chris Edger

Chris Edger

Professor of Multi-Unit Leadership at Birmingham City University