Imported from the US, the Black Friday shopping weekend bonanza has become an established date in the British retail diary. Renowned for its heavy discounts, one-time deals and frenzied shoppers, the mammoth shopping event has taken over the nation.
Shaking up tradition
Unsurprisingly, consumers have welcomed this new tradition with open arms as it gives them yet another opportunity to seize great discounts just before the Christmas period. However, for retailers, it has had a fundamental impact on traditional retail patterns.
Before this phenomenon, retailers had a steady build up to the spike in demand around Christmas – one they knew was coming and could prepare for, way in advance. This enabled them to ensure enough stock was available and further logistics support was in place.
Something to embrace or stay away from?
Since making its way across the pond, the benefits of taking part in Black Friday have been up for debate. First off, one positive is undoubtedly the impact it has on brand awareness just before the festive period.
The fact that last year saw £1.23 billion being spent in one day alone, demonstrates increased demand and attention from consumers. If you get your brand strategy right, it can make a huge different to a retailer’s performance over the Christmas period.
>See also: Building on the Black Friday bonanza
That said, Black Friday can be seen to have a negative impact. Stock availability, maintaining excellent service at peak times, a further weakening of low profit margins, and dealing with a high volume of returns after impulse purchases could severely impede a retailer in the crucial build up towards the Christmas period. For varying reasons, some high-profile retailers such as Next, Asda and Apple have refused to take part in the event.
How predictive analytics can help
While this retail craze has caused a headache for retailers, should they choose to take part, there are solutions out there to help businesses prepare and reap the benefits of Black Friday – and one of these methods is predictive analytics. Here are just some of the ways it can help:
• Can your website cope? A good analytics platform will allow you to see the amount of traffic that gets driven to your website during promotion seasons. This will give you a very clear indication of whether your retail site will be able to cope with a higher level of traffic.
• Track sentiment: Social media has become the new airing ground for disgruntled customers, who love nothing more than to share when a retailer has messed up (rightly or wrongly). Being able to track the social sentiment of your selling process (and your competitors) will mean you have a more accurate view of your customers and how they feel about your brand.
• How to spread your stock: While a lot of shopping has moved online, there is a growing trend of “click and collect” – creating an additional logistical nightmare for retailers. The worst thing a shop could do would be to accept payment only for there to be no product in their chosen store. By having an accurate overview of what is likely to be spent online, in-store and click and collect will help better plan for where you should assign your stock.
• Timing is key: Timing is everything when it comes to maximising sales – it is vital to know when most of your customers will be online – and more specifically what they are more likely to buy. This is where your existing data can really help – look into the buying patterns from last year to help you plan which stock to push this year.
• Plan for refunds: When there’s a sale, a huge spike in refunds and exchanges are sure to follow. This can cost a retailer if they do not factor this into their P&L! Based on your existing sales data, predictive analytics will be able to give retailers a more realistic idea of how much of their sales they are safe to count.
Perhaps most importantly, predictive analytics can help a retailer decide if they want to take part in the first place – to whether the potential negatives to not outweigh the positives to take part.
Like it or loathe it, Black Friday is here to stay, and retailers would be a foolish not to acknowledge its impact just before Christmas. A retailer’s biggest asset during this period is the data it has collected throughout the years. By using this data effectively, retailers will be in a much better place to not only survive Black Friday, but benefit from it.