As we hurtle towards Black Friday, retailers are firming up their plans to make the most of the boost to traffic in alignment with their overarching discounting strategies.
UK retailers seem to fall into one of two camps when it comes to the US-imported discounting day: either they have pulled away from it altogether, or they haved embraced it wholeheartedly.
Jigsaw led the fightback against Black Friday last November, when it released a manifesto setting out its full-price strategy and reasons for not taking part. Fat Face took a similar stance, giving a percentage of sales made during Black Friday to charity.
On the opposite side of the ring, Shop Direct, Asos and many high street multiples and department stores went big on Black Friday, spreading out the discounts across several days – and we expect them to do the same again this year.
Some retailers have moved away from the deep discounting we have seen in previous years, and are taking a more strategic approach to Black Friday. They are using it in a more targeted way, to clear weaker product lines. But for too many, it is still simply a race to the bottom.
Our exclusive discounting survey, published in June, showed two out of five fashion retailers go on Sale four or more times a year. A third of respondents told us they felt the need to discount to keep up with competitors. Retail veteran George Davies warned that the industry is creating “a public that is trained to want discounts”.
In previous years, retailers have continued to discount right up until Christmas, eating heavily into their margins
Whatever retailers decide to do around this year’s Black Friday, it is equally important to consider the strategy after 25 November. The impact this discounting extravaganza has on trading – before and after changed it takes place – has changed the industry significantly. In previous years, retailers have continued to discount right up until Christmas, eating heavily into their margins.
As the industry continues to manoeuvre through difficult conditions following the Brexit vote, full-price trading will become more important than ever. Increasing turnover at the expense of margin is unlikely to prove a successful strategy for any retailer.
There is no doubt that next year is going to be tough. The weakness of sterling is expected to hit even harder in the second quarter of 2017 as retailers’ and brands’ current hedging arrangements come to an end. Discounting is an important part of retail, but there is a way of doing it cleverly. The industry must not allow Black Friday fever to send it into 2017 on the back foot.