Are big discount days good for the UK retail sector?

Black Friday and Cyber Monday are looming large on the horizon for retailers in the US, and increasingly, in the UK.

But while the double discount weekend dovetails nicely with Thanksgiving holidays in the US and has been a staple diet for bargain hunters across the pond for well over a decade, in the UK the jury is still out as to the overall effect the dual events are having on the retail sector as a whole.

2014’s Black Friday extravaganza delivered a year-on-year sales increase of 44% between Thursday to Black Friday, and on Black Friday itself, UK shoppers spent £810 million and 404,835 orders were made online. This surpassed the £555 million shoppers were expected to spend, and indeed, Amazon sales were up 63% and eBay sales up 84% from 2013.

Yet new October data from the Confederation of British Industry’s (CBI) indicator of retail sales volume states the sector is now experiencing its slowest growth for six months. Surveying retailers across the country found 38% saying volumes were up on a year ago, but 20% saying they were down. This was a weighted a balance of +19%, compared with +49% in September, and retailers had expected this reading to be significantly higher, at +51%.

And this, according to Tradedoubler’s VP of product management, Jeff Johnston, can be directly attributed to the British shopper’s determination to wait for discount days to cash in on cut-price products:

“With Christmas on its way, and the shopping phenomenons Black Friday and Cyber Monday just around the corner, shoppers are now holding out for the lowest price they can get on particular products. Shoppers in the UK are more indecisive than other European consumers… with consumers taking an average of seven days to make a purchase, from the first click to the completion of a sale, compared to the European average of just under five days.

“With this in mind, it’s paramount for brands to track the user journey of its customers online, to make sure they know where their customers are at any given time and when they are set to make a purchase.

“This is possible by utilising the data driven insights available. In doing so brands and marketers can bypass guesswork and make strategic and effective decisions when it comes to targeting consumers.”

Alan Watson, managing director of Barron McCann states retailers are better-placed taking a more measured approach towards both Black Friday and Cyber Monday this year, and offers 4 tips for businesses considering a marketing campaign for both business days:

1. Limit your Black Friday offers – Whilst there is the temptation to slash prices across a range of items to ensure you target a wider customer demographic, it may be more practical to consider a limited range of products, so that you are still participating but it’s unlikely to impact too many of your product lines and promotions.

2. Evaluate IT, store and logistics requirements ahead of time – Managing the influx of demand during promotions like Black Friday is essential to the smooth running of the campaign, so ensure you have fully evaluated your online and offline IT requirements ahead of time.

3. Keep customers informed – Managing customer expectations can be the difference between a good experience and a negative one, even if you can’t avoid IT downtime or delivery delays. If customers are kept informed and feel that you’ve done everything possible then they are far likely to feel disappointed or let down by the service.

4. Ensure your marketing extends beyond just Black Friday – Keeping your customers engaged throughout the year is key to sustaining sales, so make sure that you don’t put all of your eggs into one basket when it comes to Black Friday. Keep them engaged, interested and inspired with regularly communications, loyalty incentives and special promotions that will entice them to shop with you all year round.