Black Friday now firmly established as heavyweight champion of UK retail events

This article was first published in Marketing on 30 November 2015

If the £1 billion retail sales forecasts for Black Friday are confirmed, followed by the predicted £3.2bn for the weekend and Cyber Monday being met, we will have another heavyweight champion event in UK retail. And just like the Fury and Klitschko bout, 2015’s Black Friday will have been about going the distance and winning on points. And that’s going to be margin points.

Black Friday is about big discounts and even the most premium brands were in on the action to win a share of that shopper spend. This year it has been very clear that it is not about Friday, but a whole week of shopping hype, with more deals every day. TV ads, social media and a spamtastic amount of email told us all that it was time to buy. 2015 will see Black Friday firmly established in the British psyche as the official start of the Christmas shopping spree.

The import from the US always falls on the Friday after Thanksgiving, when most Americans take a day off. But I’ve struggled to rationalise the reasons for its existence in the UK, when no one is taking holiday and at a time of year when people have traditionally been happy to spend at full price.

Perhaps the US hype is what made its UK counterpart the success it is becoming. ASDA, which played a significant role in bringing it across the pond, was heavily criticised for allowing cameras into its stores last year to capture the shopping frenzy. This year it scaled back its involvement and, like many other retailers, increased its security. So what made Black Friday infamous – a good fight for a bargain – was missing this time around.

I’m certainly not condoning any fisticuffs in the aisles, but inspiring competition amongst shoppers with huge WIGIG (When It’s Gone, It’s Gone) offers is now a mainstay of retail promotion. This year the only knock-out blows involved retailer websites going down as shoppers punched into their keyboards looking for bargains.

The John Lewis site crashed mid-afternoon and Argos shoppers had to endure page load times of more than 10 seconds. Meanwhile, Amazon didn’t pull any punches with 0.5 second page load times and reported that more than 6 million items were ordered on its site, making Black Friday 2015 its biggest-ever sales day in the UK.

However, if the stores I visited are anything to go by, Black Friday was a bit of a non-event on the high street. It could have been any other Friday morning and I suspect all the action was on-line. Certainly my email and social feeds were full of offers, social media mentions of Black Friday rose 20 per cent over last year, according to data from Salesforce Marketing Cloud, and there were interesting Instagram campaigns from Game, JDSports, Liz Earle, New Look, and Victoria’s Secret among others.

I suspect that the final Black Friday sales stats will reveal Black Friday in the UK to not only be the biggest ever, but also the most digital. The big issue though, is how much profit retailers and brands will have made. Despite the critics, the “Buy Nothing Day” campaign included, 2015 has seen Black Friday firmly establish itself in the UK due to the strength of online sales. It is now the heavyweight champion that all other retail events will be measured by.

 

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Does Black Friday signal dark days ahead for brands and retailers?

This article was first published by the Guardian on 18th November 2015

Things were much simpler growing up. I still have vivid recollections of the media coverage of the big shopping events: turning on the Oxford Street Christmas lights to herald the start of the festive shopping period; and the people camping outside Harrods the night before the sale.

After the seasonal bargains were snapped up, we experienced a sustained period of normality. There wasn’t much else to distract shoppers from their regular habits and the retail promotional calendar reflected the lives we lived.

Since then we’ve seen the huge commercialisation of key calendar dates. All Hallows’ Eve is now the full-on American Halloween experience and running alongside the more child-centric activities, there’s the increasing popular Día de Muertos, known more commonly as Mexico’s Day of the Dead.

Mothering Sunday, Father’s Day and Valentine’s Day are all key dates in the retail calendar. Singles’ Day in China, originally created by Alibaba for those without valentines, is now the biggest shopping event in the world. This year’s event marked the first time Chinese shoppers could buy global brands and sales topped $14.3bn, a 60% increase on 2014, making it bigger than Black Friday and Cyber Monday combined.

The challenge, now that hardly a month goes by without a big retail event, pre-season, mid-season or end of season sale, is that we’re training shoppers never to pay full price.

Events such as Black Friday involve deep discounts and often include products that are at the premium or luxury end of the market and would never usually be available at less than full price. The cost in margin and brand values is not sustainable, which means that brands and retailers must now reconsider this approach.

In the UK, Asda has done just that and will shun the Black Friday sales this year. My favourite is US outdoor retailer REI’s approach. Its #OptOutside initiative will mean that it closes on Black Friday – the idea being that the American public will be inspired to get outdoors and not go shopping on the day after Thanksgiving.

rei-opt-outside-campaign.jpg

There are routes that provide brands and retailers with the opportunity to create value rather than destroy it. Dynamic pricing – big in the travel sector and used by online retailers such as Amazon and Net-a-Porter – will become a larger feature in retail as brands and retailers work towards offering price flexibility based on day part or by targeting offers to distinct groups of people via email campaigns and vouchers for mobile devices.

As the level of personalisation in retail increases, personalised pricing and data-driven offers will create a more rewarding and targeted experience than Black Friday.

Collaborations between brands, or brands and retailers, provide another way of creating interest without recourse to discounting. I call this “the power of X”. However, as was the case of the chaos around the Balmain x H&M launch, these collaborations now carry the risk that the real value isn’t created for the retailer and brands involved, but for profiteering eBay traders.

But it’s still possible to create product ranges based around new and exclusive features that provide resistance to the discounting trend. For example, discounting became such an issue in the electronics sector that when Samsung partnered with designers Ronan and Erwan Bouroullec to launch Serif TV, it decided only to sell them through its own e-commerce platform and in high-end furniture stores.

Serif provides a good example of where brands are working hard to circumvent traditional retail models. Clearly things have changed since my childhood and I’m not suggesting we go back to those times. But retailers and brands need to wean themselves off the addiction of Black Friday discounts and focus instead on reframing value for their customers.

Time to dump Black Friday and commit to Singles’ Day

This article was first published by Retail Week on 6th November 2015

New retail red-letter days such as Singles’ Day should be encouraged but they should meet shoppers’ needs and build value for retailers.

Retail hates a slowdown. This applies to the relentless nature of our calendar of big events as much as to sales figures.

China Online Shopping

A journalist walks past a giant screen showing a total sales transacted of e-commerce giant Alibaba, on the “Singles’ Day” global online shopping festival held at National Aquatic Center, also known as the “Water Cube” in Beijing, China, Wednesday, Nov. 11, 2015. China’s largest Internet retailer sales reached $14.3 billion on the country’s biggest online shopping holiday, smashing last year’s figure to set a new record for a single day of sales. (AP Photo/Andy Wong)

Starting with the January sales, through to Valentine’s Day and then Easter. Father’s Day in June (in the UK at least) into ‘back to school’. Then it’s Halloween, before we finish the year with a glut of discounting in the shape of Black Friday and Cyber Monday that precede the Christmas splurge.

Such a busy retail calendar is no bad thing in itself, building sales and interest in the shopping experience is vital throughout the year. But have we gone too far and created events that just don’t work for the shopper while also eroding value for brands and retailers?

We need to transform the retail calendar. Take back to school, for instance. A good example of a retail event in need of a review. It’s no longer good enough for stores to create an experience towards the end of summer, just when the kids are returning to school. As with most retail, people are spending more time online researching back-to-school products, leading to an increase in online spend in the two months before schools return in September. Brands and retailers really need to assess the value of holding a big one-off retail event in favour of a long-term strategy.

Black Friday looms

A bigger issue, in the UK at least, surrounds the arrival of Black Friday in November. Last year it appeared to be a storming success, the UK version of the US tradition accounting for £810m in retail sales in one day. But this had fundamental implications for retailers and for the marketing strategies of brands, driving consumer behaviour towards the expectation of bargains and forcing retailers into a discounting strategy ahead of the big Christmas sales period.

Funnelling so large a proportion of retail spend into one day based on discounts is doing UK retailers few favours. In the US, Black Friday and Cyber Monday clearly cater to a consumer need based around leisure time at Thanksgiving. This just doesn’t apply in the UK. Instead, following a hard period of trading when even the darling of the high street John Lewis Partnership reported a 26% fall in pre-tax profits in the six months to 1 August, we’ve created an event that encourages consumers to stampede into stores expecting big discounts, even on premium brands. Instead, it would be better to focus on building quality, exciting, in-store and online experiences that offer an alternative to discounting.The point is to judge each retail event on whether it is relevant to consumers’ lives and to be brave enough to scrap those that are not.

In light of this, Singles’ Day, now the world’s biggest shopping day due to its popularity in China, will become even bigger. It will grow far beyond its origins as a creation by China’s online retailer Alibaba (which took £5.9bn in Singles’ Day sales in 2014) into a global phenomenon because it is based around shopper desire. A November ’anti-Valentine’s Day’, it creates a new spending opportunity based around a desire to belong and be involved in a community rather than on bagging massive discounts.

So let’s be ruthless. Encourage events, like Singles’ Day, that embrace the needs of shoppers while building value for retailers, and shun those that do not. When people are fighting in the aisles we’ve gone too far down the discount route. Supermarkets and other retailers have been clever in decluttering the in-store environment by ditching some famous but underperforming brands. Now it’s time to do the same with the retail calendar.

Sainsbury’s results may sound disappointing but the brand is doing all the right things

First published in Marketing on 11th November 2015

These are obviously testing times for the supermarket sector. Sainsbury’s has just announced a fall in both profits, by 17.9%, and like-for-like sales, down by 1.6 per cent, for the six months to 26 September.

Mike Coupe, the Sainsbury’s chief executive, said that “the grocery retail marketplace remains challenging” and cited investment in food price reductions and broader structural issues, such as food deflation, for the decline.

Analysts were expecting the falls to be steeper and my initial reaction is that I’m actually pleasantly surprised at the results. Yes, profits are down but if you look at things closely Sainsbury’s has made a £150 million in price and still delivered a 6 per cent increase in total income. It indicated that its prices “remain as competitive as ever” and claimed that price satisfaction scores have increased this year.

The problem for Sainsbury’s is that it is facing similar challenges to its rivals. Dave Lewis, the chief executive of Tesco, said in his recent CBI Conference speech that his sector faces three big challenges: the growth of digital, the growth in the number of retailers in the grocery sector and in convenience shopping, and structural costs increasing at a time of low profitability. As a result of these challenges, profit margins in the sector have shrunk from 5 per cent to 2 per cent in just five years.

Significantly, Sainsbury’s is facing the prospect of digital transformation. A challenge facing almost every business of scale anywhere in the world, it has to look at how new technologies can remove cost from its operations and how digital will enable it to connect better with their customers, who’s shopping habits are changing. It’s actually doing a pretty decent job on this and its online sales are up slightly.

And like many other big names it is in danger of being “caught in the middle”, it lost out years ago on price to Asda and Tesco, but maintained its brand values and is still a great place to shop. But shoppers are chasing value (price x quality) and are trading up, to Waitrose, and down, to Aldi and Lidl. Sainsbury’s risks being bounced out and that’s why the investment in price, making fresh produce more affordable for its customers, is significant and something I applaud.

In brand terms, Sainsbury’s is doing all the right things. The problems for the grocery retailer are not ones created by their brand positioning or advertising. Sainsbury’s is doing some innovative things with its marketing, the latest being its Halloween campaign, complete with the “Spooky Speaker” voice changing app, which provided some neat digital ideas.

There’s nothing wrong with the Sainsbury’s brand, it has a good heritage and as it prepares to launch its Christmas campaign and readies itself for a busy seasonal period, I’d say that Sainsbury’s is going about things the right way and its investment in price will pay dividends.

Has H&M lost control of its fashion collaborations?

This article was first published by Marketing on 6th November 2015

I’m a big fan of H&M’s collaborations with the famous designers of the world, writes Simon Hathaway, global chief retail officer at Cheil.

They are collaborations that result in one-off clothing ranges each year that bring high fashion to the high street.H&M’s initiative is a brilliant example of what I term “The Power of X, because collaboration between brands, or between retailers and brands, on new product lines has become one of the most powerful ideas today in retail.

The high street retailer was one of the first in fashion to understand the power of collaboration, its designer partnerships dating back to 2004 (when Karl Lagerfeld created his limited edition range for H&M).

But the scenes of chaos that met the launch of the Balmain x H&M limited edition range yesterday threaten to undermine much of its good work.

H&M hit trouble after the doors of its Regent Street store opened.

The police were called following reports of scuffles between people desperate to get their hands on some affordable Balmain gear. H&M was forced to close the store while its website also crashed due to high demand for the new range.

Enthusiasm and an element of chaos is not unusual at these H&M launches but this time around the situation seemed more extreme.

There’s no doubt that Balmain x H&M is a strong brand collaboration that drives value for H&M and also for French fashion label Balmain.

It’s a relatively small but desirable fashion house when compared to the Versaces of this world, getting a presence on the high street and free advertising in return for its designs.

As expected with this type of launch, where PR and generating word of mouth is an important factor, there’s an element of deliberate scarcity at play from H&M here, heavily advertising and publicising the product range then under-stocking it to create a buzz.

But I’d say the scenes outside H&M tip over from cleverly engineered scarcity into not understanding the amount of stock required to fulfil even basic levels of initial demand.

There’s a fine line between success and failure in these things: it’s great PR when people are camping outside the store the night before, but I’d argue your stock control is out of kilter when you’re forced to close the store with unhappy shoppers outside.

I wonder on this occasion if H&M totally understood the demand for the products.

It’s not as if the clues weren’t there. Balmain designer Olivier Rousteing has 1.6m Instagram followers and his friendship with the Kardashians and Kendall Jenner (pictured above), who have modelled his clothes, has made the Balmain brand highly desirable among high street fashionistas.

There is another significant concern for me in the way the stock management has been handled.

I’d suggest that a range like this fails to benefit retailer, brand and shoppers when it begins to look like a profiteering opportunity for the kings and queens of eBay rather than providing a genuinely exciting product experience for the dedicated followers of fashion.

When a H&M item is going for £650 on eBay within hours you have to start questioning who is really profiting here.

The situation is not irredeemable for H&M. If this happens consistently, though, then people will lose interest.

But it’s now all about resetting things for the next promotion. To focus on better planning, stock availability and making sure the web servers are up to the task. That way H&M will make money and boost its brand rather than provoking anger on the streets.