Last year, Black Friday brought Hughes Electrical its biggest sales week of the year. Managing director Robert Hughes shares some of his secrets for making the most of the opportunities in 2015
Black Friday in the States is like our Boxing Day – many people do not work after the national holiday and choose instead to shop. It was so named as it was the first day in the year when retailers went into profit. Who says Americans don’t do irony!
What Americans can do is export their culture, which they have successfully done with the help of Amazon online and Walmart/Asda in-store. Both companies appeared to take big loss-leading positions five years ago to promote the concept and it captured the moment. The bargain-hungry British public lapped up Black Friday, while the press reported on the mayhem that followed. Now it is firmly part of our retail calendar and is as much an online as an in-store phenomenon. It is no longer a single-day event, but has morphed into a long cyber-weekend, closing with Mega Monday.
Like it or loathe it, the Black Friday weekend is here to stay.
Some retailers are kicking back against it, not least because it causes security nightmares, overstretches the supply chain and replaces high-margin, high value seasonal sales with low- margin, low-price bargain sales. However, we are all aware that the power in retail no longer rests with brands or shops, but with the general public.
They do not care about our margin, our supply constraints or our up-sell potential. It does not matter what we think, it is what our customers do that is our reality. They will participate in the Black Friday weekend whether we do or don’t – they will bring forward purchases from the rest of December whether we want them to or not.
I suspect that this year they will prepare early for Black Friday by deferring purchases from previous months. Events such as “Back To School” may lose traction and I suspect in the long term that summer sales will also become less well supported. We must get with the times.
“It does not matter what we think, it is what our customers do that is our reality.”
I spoke to electrical retailers last year who said they did not support Black Friday as they did not know how to and they did not think it worth their while. They subsequently took all of the pain of a deserted high street in December, without any of the sales gains of late November. They also looked out-of-touch with their customers and were probably less supported in subsequent months.
Hughes embraced it and gained £1 million of sales on the day, a sevenfold increase in web traffic and our biggest sales week of the year, both in-store and online. We will embrace it again this year. So what will we do and what can you copy? Time to share the family secrets…
The most important thing is to spread the peak across a week, so reducing website, shop and logistics pressures. We will start on the Monday using social media to create interest and to encourage our followers to check offers throughout the week. We will make more specific offers through email, starting on the Thursday going through to the following Monday. This is a true multichannel opportunity, so we will support online marketing with local press activity, focusing on a supplier or category and encouraging people to go online or in-store to find bargains.
We will also promote Click and Collect, as it will take pressure away from our own and third-party logistics and provide the opportunity to sell extras in-store. Our Click and Collect volume rose fourfold last year and we expect it to be even greater this year.
Where a delivery has to be made, it is far better to under-promise and keep customers informed, either by providing the information online or by email. Thankfully, there is less time pressure as customers are not fearful of missing Christmas, so offering same-day or next-day delivery is not crucial. Last year, third-party couriers managed reasonably well, but encouraging in-store collection will remove some of that risk, as will having more than one courier option.
We will be primarily promoting bigger-ticket household items leading up to the cyber-weekend before switching to smaller ticket ‘Christmas’ items thereafter and going into a sale on Boxing Day. We fully expect the cyber-weekend to be bigger than Christmas or sale week and, as such, our stockholding will peak ahead of it, which is a full three weeks earlier than was previously the case.
And it’s not all about discounts. Last year, we dropped margin by two per cent but gained 70 per cent in sales with shops growing just as much as online. While most consumer interest was on browns, white-goods sales grew 35 per cent, which for a largely replacement market, shows the power of Black Friday. Miss it at your peril.