What impact has Black Friday had on Xmas peak?

Andy Mulcahy, editor, IMRG

Our Black Friday online retail forecast has been published – and this year we expect it to evolve once again, as it has done quite sharply over the past few years, to cover a longer period on the whole for participating retailers (Monday 21 – Monday 28 November 2016) with spend totalling £6.77bn for that period.

Which is not to say there is any kind of consensus on when campaigns should start, how long they should go on for or what type of character they should have. That’s the beauty of importing a retail event that has no cultural significance in this country; it has nothing from which to inherit its characteristics (being linked to Thanksgiving in the US, which we don’t celebrate here) – it also contributes to the fun of trying to forecast such an unpredictable event.

But if it is evolving, then what has it evolved from and what is it evolving to?

A history lesson

Time for a bit of a history lesson. The good news is I’ll use a few images to illustrate the development of Xmas peak – the bad news is they aren’t very good (to be fair, I’m employed as the word man, not a designer).

Xmas online used to be a pretty straightforward period to forecast. It fell into reliable patterns that repeated themselves every year, as there were naturally-occurring shopper behaviours that drove them. 

If we were to plot this reliable pattern as a line, covering the period from the mid-2000s to 2013, it would have looked something akin to the below (taking the left side as the start of November and the right side as Xmas Day):

As can be seen, there are numerous peaks that occur over a gradually-rising and falling trend line. The two highest peaks were typically the last Monday in November (Cyber Monday) and the first in December (Manic Monday). These days may have been given clever marketing names, but there were a number of influencing factors that were generally thought to be contributing to their occurrence, such as:

That’s not to say that retailers didn’t run special deals on those days to encourage people to spend with them, but they were already big online retail sales days in their own right without needing that added incentive.

There were of course the odd exceptions, such as in 2010 when the UK was buried under a deep freeze – lorries got stranded, orders couldn’t be unloaded, warehouse stock piled up and new deliveries couldn’t be accommodated efficiently. It was all good fun.

Interestingly, that’s the point at which the popularity of click & collect started to increase in this country – as retailers contacted their customers to invite them down to stores to pick up their goods with the fulfilment network under such strain. As a fulfilment option, it’s never looked back.

Then in 2014, this pattern underwent a pretty seismic change (and yes, it is slightly exaggerated to illustrate a point):

After a number of years gradually gathering momentum, that peak represented the arrival of Black Friday proper – when it reached a level of awareness among both the public and media that altered the way that people approached Xmas shopping. The key point to remember is that these trend lines are completely dependent on shopper behaviour – if shoppers change when they buy, it can have a massive impact upon retailers’ plans and the efficiency of their operations at a time of year when order volumes are at a peak.

This was the point at which November became the Xmas shopping month online, with year-on-year sales growth for the month reaching +20% while December was up just +4.6%; a record low for that month and the first time growth was single-digit, as Black Friday served to pull a large share of sales volumes forward into November.

This was a pretty testing time – with the unprecedented traffic volumes crashing retail sites and delivery operations finding themselves having to process order volumes they were not prepared for (not to mention the fact that the type of product being purchased was often unexpected too – with larger sized items such as televisions and white goods shifting in their droves, as the scale of discounted rates available made them highly attractive to shoppers).

By compressing such a huge volume of activity into a short timeframe – the Black Friday day mainly, but it carried on over the weekend too – things had become a bit tough to manage. Then, in 2015, we had another shift:

As can be seen, the trend line spread out a bit more than in 2014 as retailers ran ‘Black Friday period’ campaigns which extended over longer periods. 2014 was marked by panic discounting to stimulate activity, as the Xmas shopping period seemed slow to start and no-one knew quite how determining Black Friday was about to become. 2015 was a lot more focused on category- or range-specific discounting over a longer period, easing the strain on operations.

That said, the line still shows a bulk of activity quite bunched up – and that’s when people are most likely to spend their money, as they have been ‘trained’ into thinking that’s when they’re likely to get the best deals. 

Multichannel retailing also seemed to go out of the window last year, with people just going online to shop and leaving many stores (which had opened early and put on extra staff) looking decidedly empty.

It was progress, but from an efficiency perspective it was pretty far from perfect.

Are people shopping earlier?

As these (granted, rather rough) trend lines show, Xmas online used to be a fairly spread out event with mini peaks and larger peaks; but Black Friday has served to condense a bulk of activity into a shorter space of time – and one that occurs earlier in the Xmas period (although, being November, there are of course those who would argue it doesn’t actually count as being the Xmas period yet).

As per our forecast, we anticipate a further spreading out of sales in the lead-up to Black Friday – so does this mean that people are happy to shop earlier?

Well, maybe. Some retailers report that ‘Xmas’ is the most popular search term on their sites from as early as September – in some cases, even over the summer. But just because they are searching sooner, are they ready to buy?

The answer to that depends on: 

To paraphrase a sentimental 90s movie – if you build it, will they come? The old complaint of ‘blooming Xmas starting earlier every year’ still rings true for many people, so getting the timing just right to maximise the effect of marketing efforts could really be key – as tough to identify as that timing may be.

Where next?

One more naff image I’m afraid, then we’re done.

A retailer survey we ran earlier this year found that, on average, they are planning to run Black Friday campaigns that last seven days during peak 2016. That might sound longer than in 2015, but actually the survey also found they tended to run campaigns lasting seven days last year too. If we rely exclusively on that bit of information then, we can expect no change this year.

So why is the peak bump jumping back slightly in this image?

The difference this year (if one does come to pass) may relate to how shoppers have been trained to expect things to happen during Black Friday. In the years leading up to 2014, people came to expect some level of discounts to be available on the day. In 2014, the expectation was set for big and very wide-ranging discounts to be available. Then in 2015, it was a bit more focused but ultimately they still expected to be able to find discounted products and – crucially – for them to be made available over a longer period (avoiding the Black Friday 2014 site traffic jams).

In 2016 it seems likely that people will expect something similar to 2015 to happen, but this time they might be a bit more used to understanding that Black Friday isn’t just a day – it refers to an undefined period of time during which the opportunity to grab a bargain reaches a high. 

Whether that means they’ll be primed for actual purchasing at the start of that week – or even may have already started in some cases – remains to be seen.

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