Beware Red Friday: Chasing Black Friday shoppers will push high street retailers into the red, warns

07-Nov-2018

As B&Q joins the ranks of retailers blacking out Black Friday, the online delivery specialist ParcelHero says traditional stores should avoid taking on Amazon in a race to the lowest price.
 
The home delivery specialist ParcelHero says high street stores should not try to compete with the likes of Amazon by joining in the Black Friday price-slashing frenzy in a race to the bottom. Instead they should concentrate on everyday value, customer experience and emphasising staff expertise.

‘Traditional high street stores can’t hope to make a profit matching pureplay online sellers’ Black Friday deals on November 23rd,’ says ParcelHero’s head of consumer research, David Jinks MILT: ‘But some stores seem hell-bent on keeping up their market share on the day, come what may.’

But David says the truth is beginning to dawn on town centre retailers that they can’t out-Amazon Amazon. ‘B&Q is the latest retailer to join the likes of M&S, Ikea, Asda, Selfridges, Homebase and Primark in shunning ultra-cheap deals on Black Friday, and they won’t be the last.’

Warns David: ‘Black Friday shoppers expect rock-bottom prices but also the same level of service and expertise as every other day of the year; and that includes free returns. For example. ParcelHero’s recent research revealed 50% of womens’ clothing bought on Black Friday last year was returned. Small wonder Black Friday sales seldom equal profit for high street retailers.’

David explains: ‘High street stores have wages and landlord rents to pay; overheads such as heating and electricity to cover, and, of course, exorbitant business rates to meet. As such their bottom line is higher than online ‘A stars’ such as Amazon, ASOS and AO. And our latest research reveals it’s three times more expensive for an omnichannel brick and mortar/online retailer to deliver an item than if a customer buys it in store; so many retailers are struggling to compete online as well as in store on Black Friday.’

Adds David: ‘ParcelHero’s industry report Retailers Reach the Point of No Returns reveals most customers now expect to be able to return any item for free, whatever the reason, and that on average one in four Back Friday items are returned. B&Q found 43% of its customers say they often or always returned items purchased in dramatic one day sales such as Black Friday. If a retailer has already sacrificed most of their profit pursuing the Black Friday pound, returns will push that into a loss.’

And David says Black Friday town-centre store deals do nothing to encourage customer loyalty or create a good impression for consumers: ‘Let’s face it, Black Friday shopping can be a dark experience for retailers and consumers alike. Marks & Spencer’s boss Steve Rowe said recently: “I bet most retailers wish Black Friday was an American import that never arrived.” That’s not surprising; Black Friday sales leave a bad taste in the mouth of both retailers and consumers battling through crowds of bargain seekers. It’s small wonder shoppers are increasingly voting with their feet and leaving the crowded and frankly scary high street Black Friday experience and moving online.’

Reveals David: ‘Back in 2013 it was Asda who popularised Black Friday on the high street.  But it’s noticeable that, following near riots in its stores in 2014, the Black Friday pioneer has quit the whole event, saying it had received strong customer feedback that its shoppers didn't want the pressure of a ‘flash sale’ and prefer low prices throughout the festive season.

 ‘The likes of Ikea, Selfridges and Primark are also riding out the Black Friday storm. And it seems that the tide is with them: in 2017 Black Friday shop footfall was down in the UK 8% YOY; even as online purchases soared 11.7% to £1.4bn.’

Concludes David: ‘High street retailers shouldn’t seek to join in the Black Friday feeding frenzy when all the figures show that, long term, it is consistent good value; a great in-store experience, and knowledgeable, friendly, staff that are the key to rebuilding high street sales. None of these things can be achieved if the majority of a store’s best deals are thrown into one day, in a crowded, pressurised shopping environment. town centre stores should ditch Black Friday sales that risk pushing them into the red.’