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Black Friday: Helpful or harmful?

As Black Friday and Cyber Monday approach many businesses are frantically preparing themselves for the bargain hunters, but does the event just carry the illusion of success?

Last year’s Asda fiasco went down in history as consumers battled their way towards bargain flat screen televisions and this year they are opting out. In the wake of this, many small businesses are asking themselves the same question: ‘should I opt in or out of Black Friday?’

Since it all started in 1960, the Friday after Thanksgiving became a phenomenon as retailers slashed their prices to spur Christmas shopping sprees.

Amazon brought Black Friday to the UK in 2010 and since then it has grown significantly. This year the day falls on the 27th November and it is set to be the biggest year yet.

Visa Europe expects an impressive £1.91 billion to be spent in total (up 20% from 2013 and a 4% increase from 2014), £721 million of which will be spent online (up 61% from 2013 and 17% from 2014).

And if that isn’t enough, Visa also expect a further £629 million to be spent on the biggest online shopping day of the year, Cyber Monday.

A divide in opinion

However, this year, Black Friday is dividing the retail industry. With the staggering spending figures, it’s easy to see why small businesses might be tempted to take part. But despite the hype many of the larger retailers like Primark, Oasis and Asda are choosing to opt out.

And Black Friday could be costing businesses more than they bargained for: while the tills ring to the tune of almost £1.9 million, a recent article in City AM states that the cost of returns could hit retailers as hard as £180 million.

LCP Consulting recently interviewed 100 British and American retail executives and a third (28%) of them branded the day ‘unprofitable’ and an ‘unsustainable promotion’.

However, many also stated that Black Friday proved positive for their business – depicting a stark divide in opinion surrounding the economic benefits of the day.

Founder and chief executive of Clear Returns told City AM ‘on the surface, Black Friday is a successful key trading day, but it’s a gloomier picture once returns are factored in’.

Be Prepared

Small businesses often feel pressure to compete with the larger retailers approaching the festive season, however, running flash sales like Black Friday can prove damaging.

With the days fast approaching, industry experts are urging retailers to make sure that they are prepared for the two busiest shopping events of the year.

LCP Consulting’s annual Omnichannel report found that retailers with a more established presence (both online and in store) are in a better position to capitalise from Black Friday sales. On the other hand, those who do not have the infrastructure to deliver on the day are at risk of harming their sales through ‘alienating customers’, running out of stock and risking their reputation.

Parcel delivery comparison website, Parcel2Go.com have also strongly advised small businesses to prepare well ahead and make sure that they have the right systems in place to cope with the increased levels of traffic/ footfall and the increase in deliveries and returns.

Marketing manager at Parcel2Go.com, Robert Mead said:

‘It’s understandable that retailers will see Black Friday and Cyber Monday as an opportunity to cash in, but running a flash sale without considering the logistics of doing so – i.e. providing swift, reliable parcel delivery and a sensible returns policy – could do more harm than good in the long term.’

The day now has a massive build up and aftermath, with some shops starting their deals a week in advance. Shane Nolan, director of SMB Sales at Google UK and Ireland, told the Guardian:

‘As more retailers offer deals earlier in the season, Black Friday excitement is no longer confined to a single day. That’s why it’s so important for SMEs to plan ahead to meet the needs and expectations of customers, giving them significant advantage over the competition.’

The online world can be an extremely competitive place for small businesses, with the majority of spending taking place on the major platforms like Amazon. Making sure that your website is compatible with mobile devices is the first place to start. Nolan says:

‘By creating the best mobile experience possible, understanding search behaviour and optimising for keywords, SMEs can profit from the biggest ever day for UK online sales’.

If your business chooses to take part, it’s worth having a solid strategy in place before you commit to a campaign. Many independent businesses in the UK started their preparations months ago.

As an established date in the British retail calendar, this American import is set to stay – it’s just up to you to decide whether it’s right for you and your small business. Are you taking part? We’d love to hear what you’ve got planned.

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Melanie Luff

About the author

Melanie Luff is an in-house journalist and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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