For anyone not working for a retailer Black Friday/Cyber Weekend is a great time. Your favourite brands and retailers slash prices in the fight for sales and consumer spending in the run up to Christmas, meaning bargains on products that you would have had to buy at full price a couple of years ago, knowing only too well that the price would be slashed on Boxing Day
You can now grab that pair of Nikes you wanted with a 40% discount, or get that Christmas present for a loved one with a discount that makes even Scrooge like shoppers feel generous.
For anyone working for a brand or retailer Black Friday is a drug that we know is killing us longer term but sadly we just can’t quite shake…
Pre Christmas should be the time of year where we get to charge top dollar for our products and ensure a strong balance sheet to take into the barren lands of Q1, instead many companies end up sacrificing long term profitability for short term cash flow.
Even the normally steady Next was forced into a Black Friday sale this year - for the first time ever. If that doesn’t send a chill down the spine of UK retailers then I’m not sure what will!
Sadly due to increased competition, too much stock, lack of definition in product offering and the shadow of Amazon looming large over the industry, Black Friday is a US import that doesn’t look to be ending in the near future.
For retail analysts it’s now easy to pick which companies will post poor trading results in early 2018, they are the ones that will now remain in discount mode all the way to Christmas.
In the process they’ll no doubt keep the smiles on the faces of their now discount driven consumer but will likely cause their finance directors and senior managers sleepless nights.
Is this discount driven bonanza now simply part of our industry - or is there another way?
Well, some brands with strong stories to tell refused to press the discount point. Jigsaw being the most high profile company to do so. With heavy investment in advertising recently they’re riding a wave of consumer desire and this makes it easier to hold their nerve.
We saw some retailers using the weekend as the opportunity to dump under performing stock, removing their better sellers from their site and putting the whole offering on 50% off. The popular products then being added back once the discount ended on Tuesday morning. A strong strategy but one only available to companies that have reached a certain size, both in people and collection.
In reality though the only way companies can get out of this dangerous addiction is a change of course that moves away from current buying practises and focuses on understanding the customer, their wants, their shopping habits and their likely performance much earlier in the season.
The competition won’t go away, so focusing on their own offering in this manner is the only way to succeed in the current environment.
Missguided in recent times have shown how important it is to focus on this approach and the results that can be driven by ensuring your product fully matches your audience.
For the smartest retailers 2018 should be the year of selling less but making more money - it’s the only way to move away from this addiction that is slowly killing off the industry.