Analysis: Six ways retailers can prepare for Black Friday

Both physical and online stores buckled under the pressure on November 28 as retailers had not planned for the extraordinary deluge of demand from bargain hunters.

Given that the event has now become a fixture in the minds of UK consumers, how can retailers better prepare for Black Friday 2015 on November 27? The KPMG/Ipsos Retail Think Tank debated this and suggests some golden rules.

1. Decide early – are you in or out?

Sales on Black Friday 2014 reached unprecedented levels but what followed was the weakest December sales growth since 2008. Retailers therefore have to make a choice, and make it early – they are either in or out. If they decide to participate, it is crucial to get the strategy right and this needs meticulous planning – many did this in January – and careful execution rather than snap last-minute discounting decisions.

2. Strike the right balance

Previously, promotions were driven by the need to shift end-of-season stock or around key events. The challenge is that shoppers no longer think in this way. For retailers to really make the most of a small window of heavy discounting, they need to strike the right balance between volume and margin. Rather than dramatically discounting all products, a more nuanced approach, focused on limited lines and targeted reductions, will help ensure that retailers can realise the benefits of increased volume on Black Friday without disproportionately damaging their margins or lowering the chances of delivering strong overall Christmas results.

 3. Fine tune logistics

A crucial part of any retailer’s sales and promotion strategy is to know what to promote, when to promote it and to have excellence in supply chain in order to be able to both work with suppliers around the promotion and also to fulfil any orders. Mess this up and you probably mess up Christmas itself. Enhanced communication with suppliers and logistics companies is essential for the process to run smoothly. Additionally, testing supply and delivery channels throughout the year is a good way to ensure operations are fully functional and able to deal with fluctuations in traffic and demand.

4. Control the crowding

In the days following Black Friday 2014, media coverage highlighted in-store crowding and the less than exemplary behaviour of ‘keen’ consumers on the hunt for a bargain. Retailers need to work on the staffing levels and the location of the key items being marketed to better control the in-store experience this year.

5. Stress test digital channels

In the digital sphere, numerous websites failed or even collapsed during Black Friday 2014, and with loading times taking considerably longer, many retailers lost out as consumers were deterred from purchasing. Retailers need to stress test their websites to determine whether they can cope. With such a surge in online orders on Black Friday, making sure that websites can withstand this spike in activity will be crucial.

6. Review the duration

Given the date itself is somewhat insignificant in the traditional UK calendar, one approach to managing the chaos experienced during Black Friday 2014 could be to extend the sales event over a whole week, wrapping up Black Friday, Cyber Monday (and the days in between) in a neat little bow. This would certainly reduce the risk of overcrowded stores, alleviate pressures online and prevent logistics being overstretched. However, should this be the case, maybe the question on retailer’s lips shouldn’t be “how do we manage Black Friday” but instead “do we really need January sales?”