What did we learn from Black Friday 2016?
Andy Mulcahy, editor, IMRG
So – that’s that done for another year then (at least for those involved in selling products – delivery operations are still very much dealing with actually fulfilling the huge volume of orders).
As it’s shown over the past few years, Black Friday has a remarkable capacity for behaving in ways that no-one expected and shifting in size and scale – and this year appears to have been no exception (total online spend came in at £1.23bn, with the peak spend spreading out over a longer period – see our spend review).
So let’s have a look at what was new in 2016 – what did we learn this time round?
Black Friday is not a day
Black Friday is linked to Thanksgiving, which has no cultural significance in the UK – hence the day has been extended into a period in ways that you can’t do with culturally significant days (ever heard of the ‘Xmas Day period’?).
There is also no consensus on when to start or end, or how long a campaign should be. Looking at the latest IMRG comScore Retailer Ranking, the number of top 100 retailers offering Black Friday campaigns for each day last week were as follows:
- Monday 21 Nov – 26 (15 launched that day), 25 offering non-Black Friday sale
- Tuesday 22 Nov – 29 (3 launched that day), 27 offering non-Black Friday sale
- Wednesday 23 Nov – 37 (8 launched that day), 24 offering non-Black Friday sale
- Thursday 24 Nov – 44 (7 launched that day), 20 offering non-Black Friday sale
- Friday 25 Nov – 66 (22 launched that day), 10 offering non-Black Friday sale
Even before the start of that week, on Friday 18 Nov there were 11 live with Black Friday campaigns – so there were plenty of incentives for people to shop earlier. And our data showed that the sales uplift on those days leading up to Black Friday was pretty strong (again, see our spend review).
Is the character of Black Friday a bit regressive?
Black Friday creates a lot of marketing noise, as it happens in a short period of time at huge scale. This appears to have given the event its own identity, that seems rather at odds with what is considered to be retail best practice during the rest of the year.
Whereas usually the focus is typically on optimising experiences – through understanding the customer, personalising and showing relevant information, removing friction points etc – Black Friday is a bit more like a jumble sale in terms of how it is conveyed to shoppers.
Nowhere is this more apparent than in marketing for the event. Think of Xmas marketing in recent years and multi-million pound blockbuster videos featuring dogs on trampolines probably come to mind. It’s all very modern and designed to be highly shareable. Think of Black Friday marketing however, and it’s a bit more like this:
Not terribly imaginative, almost universally using white text against a black background, focused explicitly on the fact that there is a sale on and little in the way of engaging content. Due to the saturation of advertising about Black Friday, it can become very fatiguing – particularly on radio, with advert following advert all saying the same thing, and in newspapers; on Black Friday, the Metro featured no less than 35 separate adverts all saying the same thing in more or less the same way.
It would appear that there is vast scope for innovation around how Black Friday is marketed to make it more engaging and interesting for shoppers.
The detail is in the margins
There is no reason why people would be shopping in incredibly high numbers on Friday 25 Nov unless there was a specific incentive to do so – and that incentive is discounting.
The potential threat that Black Friday poses to profit margins is pretty clear – LCP Consulting recently reported that 61% of UK retailers responding to its survey saw Black Friday as an unprofitable and unsustainable promotion. Problem is, Black Friday has become well and truly cemented in the shopper consciousness – nor is it going anywhere anytime soon, despite reports suggesting it was over earlier this year – so what’s to be done about it?
Two approaches became apparent this year:
- The first point is that, despite all the talk of discounting, average basket values (ABVs) are not on an irreversible decline – year-to-date (Jan-Oct), the overall ABV is £81, up from £78 for the same period in 2015. In fact, October 2016’s ABV was £90 – the highest since March 2011. Discounting activity isn’t just specific to Black Friday, it is used all year – the trick is to employ it as a hook to attract shoppers to access the top deals, but then associate products with the discounted goods – either available at full price or a lower discounted rate – that are likely to appeal at that time, helping to average out the hit to margins; and
- The second point relates to opportunities for including additional revenue streams. Amazon, for example, opened up their sales events to sponsorship this year – American Express for their Black Friday campaign, Braun for their Cyber Week campaign – helping to further buffer against any hit to profits from discounting.
Competition for new customers is fierce
That’s true at any time of year, but during the Black Friday period people have been primed to shop – so securing a share of that spend takes on special significance, as it will be your competitors that are likely to benefit if you fail to do so. In football parlance, it’s a ‘six-pointer’.
This led many companies who provide subscription-type services (mobile phone companies for example) to offer attractive new customer packages, with discounted up-front costs for signing up or reduced monthly costs for the duration of the contract.
The appeal for new customers is clear, but the potential issue relates to how existing customers – who may have signed up to a package earlier that is not as good from their perspective – can become frustrated and alienated by what they may see as preferential treatment for other customers.
Some got around this by offering ‘existing customer deals’, enabling them to add options to their contracts at a discounted rate – which may appease some, but its possible that the balance between keeping new and existing customers happy wasn’t entirely equal.
The Black Fridayisation of everything
Many think about Black Friday as being a retail event, but businesses in plenty of other sectors have cottoned on to the fact that people have now been ‘primed’ to shop around that time of year and launch their own Black Friday-focused campaigns. Sectors joining in this year included ones you wouldn’t have thought could – salons and estate agents, no less. It seems no sector is safe.
This is a potential threat for retailers, as it could lead to spend being diverted to other sectors at this key moment in the retail calendar – but it’s a potentially risky tactic for these other sectors to employ.
In retail, Black Friday has served to compress already existing demand into a tighter timescale rather than generate completely new ordering activity. It’s quite an extreme event and there are several retailers who would gladly see the back of it (though others do think its great, it has to be said for balance).
It’s quite possible that, in their haste to get involved, they are only looking at the potential for short-term marketing gains rather than listening to the challenges retailers have had to adapt (and indeed, are still adapting) to around compressing demand and having a situation in which customers expect to be able to have access to huge discounts.
As we’ve seen over the past couple of years, once the beast is out of its cage it won’t go back in happily.