As the buying frenzy that’s Black Friday moves closer, retailers continue to plan their activity well in advance. But is this something they welcome or are wary of, especially given this year's cocktail of high inflation, rising costs and the cost-of-living crisis?
Well, that’s what we delved into in a recent study with over 100 UK retailers. So when it comes to Black Friday, what are they thinking, and how are they feeling?
Black Friday is important
Ultimately, this time of year is crucial for driving revenue. That’s why over one-third (34%) of those surveyed highlighted this as the key reason they participate, with just 1% saying they would have no involvement.
And whether good or bad, depending on your perspective, it’s become a habit. Nearly half of retailers (48%) indicate it’s ingrained in the minds of both customers and retailers, making non-participation difficult: if you don’t participate, you miss out on sales.
So it’s no surprise that the majority (58%) highlighted sales growth as the key outcome for them. For one-third, it’s their most important sales period of the year. And growing sales also translates into customer growth, with new customer acquisition being seen as the number one outcome for 64%.
But it’s not all rosy. Sacrificing profits for sales, logistical challenges around huge demand spikes, and the impact on loyalty as customers swap considered purchases with specific retailers for product and deal-led behaviours all have an impact.
Preparing for Black Friday 2023
And when it comes to this year, it’s the cost-of-living crisis and what this means for the public’s confidence and ability to spend that’s front of mind when retailers are developing their strategy.
Not surprisingly, nearly three-quarters (71%) are factoring this into their planning. But while recognising the pressures on people, they’re mindful of the economic realities for their business and what it means to how flexible they can be. The result? Retailers are looking to balance their costs base with the level of discount they can bear. For nearly two in five (38%), this year’s cost pressures mean cutting margins further to accommodate Black Friday isn’t possible.
To adapt to this situation:
- 28% plan to limit what they offer in the sale.
- 23% are looking to focus more on current customers by prioritising and rewarding them.
- 12% will offer fewer discounts.
- 11% will limit the duration they will offer discounts over.
Traditionally, there’s been a trend to starting promotions earlier and even priming audiences as early as September, well in advance of Black Friday. However, over half plan to focus their activity purely in November. 36% of retailers polled are looking to run their promotions just one week before, while one-fifth (21%) are looking at only two weeks out.
Confidence is muted
And the multitude of pressures faced this year is taking a toll on retailer confidence. Indeed, the feelings as to whether this will be a good, bad, or indifferent Black Friday are evenly split.
The highest number of responders anticipate sales will be better than in 2022. But this only equates to 36%. 32% are forecasting they will be flat, while one-third (33%) believe sales will decline compared to Black Friday 2022.
While lower expectations this year may be based on economic uncertainties, perhaps this is a sign that the nature of Black Friday is changing.
What’s the future of Black Friday
On the whole, retailer perceptions towards Black Friday are positive. The majority (51%) highlighted that, as a phenomenon, Black Friday can’t be ignored. And as a vehicle for driving revenue, 40% cited this as its critical positive benefit on retailing.
But it’s not all positive. For some, it’s distorting the retail calendar by putting greater pressure – and potential risk – on a few weeks at the end of the year. 8% go so far as to say it’s killing retail and simply encouraging rampant excessive consumerism.
We’re also seeing a significant minority beginning to question Black Friday. When asked if they had the choice, 37% of retailers stated they would be willing not to participate in Black Friday altogether, with 39% believing it’s not sustainable in its current form.
So is this thinking just a blip, or is it the start of a rethink of Black Friday? It will be interesting to see how it develops in the next few years.
To dig deeper into retailer perceptions around Black Friday, find out more about their thoughts and identify actions you can take to secure a successful event, download the What retailers really think about Black Friday study.
**This article was previously featured on the IMRG website.