Black Friday – Success or Costly Venture?

So, once again, Black Friday is over and we are now in the run in to Christmas. But what does Black Friday really achieve for the retailers or consumers, was it a success of a costly venture?

This is another initiative that we have taken from the US and implemented in a bid to increase retail sales. It has achieved one thing for certain, the number of sales has increased, those being discounted offers from retailers, but has it increased profit for the retailers or just meant that once again customers are going to hold off making purchases at full price in expectation of the Black Friday event.

Nearly 30 years ago, I did my management training at Marks & Spencer, in those days we had two, occasionally three, sales each year and these were undertaken to get rid of any end of line items. We didn’t have outlet stores in those days, so we had to manage stock very carefully. Ordering was a science and store profit, on one hand, was down to the amount of each line that was left over and had to be reduced.

So back to the present day, all major retailers are almost in a permanent cycle of sale and then have to undertake further reductions for these major events, are they not creating a rod for their own backs. If they went back to managing stock carefully and working to strict seasons, they would ensure that more customers are paying full price and their additional overheads generated by promoting more sales were reduced.

The ultimate results would probably be a slightly lower overall turnover but higher profit margins and as a shareholder I would rather see higher margins and re-investment in expanding the customer base over higher turnover but lower margins and consequently lower investment.

Human nature will drive the majority of us to look for the best price and retailers are playing into the consumers’ hands, so as a business I think it is time retail changed its position.

Let me know what you think?