FRIDAY I’M IN LOVE

The theme of this blog is about the Black Friday phenomenon that has been around in various guises since the 1930’s in the USA. Traditionally it falls on the day after Thanksgiving Day and is seen by retailers as an opportunity to encourage shoppers to come to their stores and benefit from low prices and special promotions that are on offer on that day. Many companies in the US market also traditionally have given employees a day off to make the celebrations into an extended weekend: Black Friday is seen as an effective initiative to create interest and diversion for people during this holiday period.

Some commentators trace the name to the fact that it is often the first day in the year when retailers begin to make a profit: moving into the black as opposed to into the red. The latter signifies losses.

In theory, and partially in practice, prices are slashed and it is designed to whip shoppers into a frenzy of excitement where they will slash out a month or so ahead of the main Christmas shopping season.

Due to its popularity in the USA, it quickly spread to the UK and other parts of Europe as non-US retailers also wanted to cash in on the extra sales and profits.

With predictable inevitability Amazon also jumped into action and drove a spate of online activity around this date.

As is the case with many aspects of retailing, the large retailers expect much of the transactions to occur via the online medium. In 2016 around twenty retailers will participate aggressively in Black Friday promotions and activities. They range from Halfords and TK Maxx to Asda and Toys R Us.

Inevitably and because largely of its popularity such retailers have actually started the campaigns and promotions well ahead of the actual day itself. On average many of them launched their activities twelve days beforehand. Discounts on regular prices can range from 20 to 50 per cent.

Even more problematic is the extension of the concept of Black Friday. We now have Cyber Monday and Giving Tuesday in addition.

What are we to make of this phenomenon?

As you may recognise from previous blogs I tend to adopt a cynical view of most things in life and with retailing in general. I am particularly cynical with the activities of retailers with respect to pricing and promotional campaigns. We have witnessed the demise of traditional sales periods such as immediately after Christmas and into the months of January and February Traditionally in these months retail trade is slow in many European countries and in the North American market due to the excesses and splurges of shoppers in the period leading up to Christmas.

In the North American market over the past decade or so, retailers have increasingly started sales campaigns and promotional offers as early as the end of October in an attempt to generate footfall and sales. Online retailers such as Amazon and ASOS have consistently run such campaigns throughout the year. Black Friday is perhaps the most publicised attempt to capitalise on early sales campaigns and certainly has attracted much publicity in the general media.

These campaigns in general and Black Friday in particular have had both positive and detrimental effects on business. They certainly have engendered excitement and expectation among shoppers in both the USA, and parts of Europe. This is evidenced by visual clues such as queues of people waiting outside stores overnight, in an attempt to capture the very best possible deals when the doors open.

In the UK John Lewis generated a 15.5 per cent increase in internet sales during Black Friday and claimed to have created sales of £187.7 million in one week.

However a number of myths have emerged about the concept of Black Friday and its supposed effectiveness.

A quick perusal of google will reveal to you a number of articles debunking Black Friday. For instance in the USA market it is commonly assumed that it generates the most sales and footfall in a calendar day. In fact for a number of years the last Saturday before Christmas supersedes Black Friday on both counts.

This article (https://www.msn.com/en-gb/money/shoppingandvouchers/the-truth-behind-10-black-friday-myths/ar-BBmVx5w) identifies a number of myths such as the following ones.

Myth: Stores will match competitor’s prices

Many large retailers have price-matching policies that guarantee they will match (or beat) lower prices advertised by competitors. Read the fine print, however, and you’ll see that most of these policies don’t apply from Thanksgiving through Cyber Monday. Shoppers can try bringing along a print ad from a circular or local newspaper and hope for a generous clerk, but others standing in the interminable checkout lines may not appreciate the attempt.

Myth: Most shoppers score amazing bargains.

Black Friday sales thrive on the illusion of deep discounts. A study commissioned by The Wall Street Journal, however, found that better deals on a wide assortment of products pop up throughout the year — and that includes December. Moreover, the biggest deals often are available in extremely limited quantities, which means only a few folks enjoy anywhere close to the bargains that ads promise. And then there’s this: Retailers don’t just give away merchandise and suffer the profit consequences. According to industry analysts, prices that have been so generously lowered already factor in the target profit margin. Sure, holiday shoppers are getting a good deal, but so is the merchant.

 

 

Myth: High-end retailers don’t participate.

 

 

In addition to department stores such as JC Penney, Sears, Macy’s, and Kohl’s, upscale stores play the price-cut game. For luxury apparel at discounted prices, check Nordstrom, Neiman Marcus, Eddie Bauer, The North Face, and Bloomingdale’s. The big shopping day also may be the moment to drive off in a luxury car. Companies such as Mercedes-Benz, Audi, and BMW often offer Black Friday specials. Some industry analysts recommend waiting until December, however, when year-end prices fall further.

Similar myths have been exposed in the UK market.

A report recently produced by the Which organisation (https://www.theguardian.com/business/2016/nov/16/black-friday-uk-warning-report-half-offers-real-deal-pricing) shows that many items that were promoted on special price deals were in fact cheaper in the months before and after Black Friday. “The study investigated 178 deals from Black Friday 2015 tracking the daily price moves of 20 popular electrical gadgets on Amazon, AO, Argos, Curry’s and John Lewis for three months before and two months after Black Friday.

They found that only 90 deals were cheapest on Black Friday. A Curry’s promise of a £101 saving on a Samsung TV was not as good as it looked, as the £748 price tag was only a pound less than on the eve of Black Friday and it had been on promotion at £699 in September. AO trumpeted a £200 saving on a Vax vacuum cleaner at £99, yet it had been on sale for £69 the previous day and on average for £96.50 in the three months leading up to Black Friday.”

What can we learn from these observations?

Firstly as with many such “apparent” special deals, we need to be careful of their full value and authenticity. Such deals do not always do “what they say on the tin”. This is exemplified in the way in which the “was” price was quoted. Government legislation requires retailers to quote a price is supposed to be the most recent price the item has been sold at for 28 consecutive days or more. In many cases the Which study suspected that this was note happening. Instead retailers were quoting a price which was an older and higher “was” price. While this is disputed by the retailers it nonetheless highlights mechanisms by which retailers can distort the picture and add to the layer of confusion among shoppers.

Black Friday certainly adds to the intrigue and excitement for shoppers. However shoppers should beware of some of the claims and special offers. Retailers in my view have devalued the impact of Black Friday by introducing other concepts as Cyber Monday and instigating special deals a couple of months beforehand. The concept still holds value but is likely to be superseded by yet more gimmicks and initiatives. Let’s see.

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IT’S SHOPPING JIM: BUT NOT AS WE KNOW IT!

I have mangled the title of this blog from a misattributed quote from Star Trek. I am referring in this instance to how the act of shopping is constantly changing before our eyes. In various chapters of the text we have discussed the concept of experiential marketing and how it is so relevant for retailers and by implication, shoppers.

Of course the concept is not new: it has been practiced for many years in various business sectors such as the sports and entertainment areas. Many commentators argue that its growing importance has been driven by the ever more sophisticated customers that are out there today. Fired up by higher levels of disposable income (relatively speaking) their expectations levels continue to rise. Organisations, particularly in the services area have to respond accordingly and provide what is often referred to in the literature as an “enhanced and positive customer experience”.

That customer journey is built around four pillars: engagement, interaction, participation and immersion.

In the context of retailing this largely revolves the development and creation of a positive shopping experience – both on an online and physical basis. In this blog I focus on the implications for physical “bricks and mortar” stores and outlets.

In chapter five of the text we examine the nature of the retail selling environment and make the observation that physical stores in many cases have reinvented themselves through the creation of “positive shopper journeys and experiences. This focuses on specific aspects such as store design, layout and atmospherics. I do not intend to revisit them here but I will make a number of observations that have struck me recently as I read about the continued responses of retailers to the concept of experiential marketing.

In particular I was struck by the attempts of a few retailers to enhance the shopper experience recently.

Firstly Diesel, the clothing retailer recently announced a venture which at first glance appears to be so “wacky” that it defies analysis. At the end of October (2016) it introduced a strategy at its new flagship store which is built around a 5D multi-sensory Virtual Reality experience. It designed this concept in partnership with a third party company: Savvy. The latter is a retail and shopping marketing agency. It builds upon an earlier strategy called “Fur you: Fur me” campaign. Through the use of CGI and 3D binaural sound design it creates a world of furry characters. In this virtual world, shoppers can ride around on the back of these creatures, fly through clouds and furry trees. Reality is further augmented by creating features such as windy conditions. Through VR diesel also creates an interesting trapeze experience. The experience also makes use of smell – through the introduction of the scent of candy floss – to further heighten the experience (http://www.eventmagazine.co.uk/diesel-launches-flagship-store-vr-experience/brands/article/1413832).

All very interesting and potentially entertaining you might observe. However what has this got to do with the basics of shopping? Is this a step too far? Diesel clearly embraces the notion of providing a “fun”, entertaining and immersive experience for visitors to its store. Will it encourage or motivate shoppers to spend some money in the store? Or will they see it as a fun place to “kill some time” and provide entertainment for their kids? What target market indeed are they addressing via this new initiative?

Certainly from the perspective of its brand personality it sees itself as a fun brand targeting young people including teenagers It also has a “diesel Kids” range. On this basis it possibly can be argued that this “wacky” approach fits broadly into the brand associations that many of its followers might buy into.

Another retailer – Foyles (A UK book retailer) has also embarked on experiential marketing campaigns, albeit in a more traditional and conservative (relatively speaking) way. It has adopted a strategy which is based on the presumption of “marrying in-store technology with a community-led retail experience” (Retail Week). Its Director of Customer Services notes that their research identifies four segments or groups of shoppers that frequent their stores.

  1. Leave me to browse.
  2. Please help me.
  3. Connect with me.
  4. Immerse me.

The latter two segments might be impressed by some of their initiatives. One such activity is the introduction of motion-sensitive audio visual pads that are scattered around the store and where shoppers can listen to authors reading their works aloud.

Oasis the clothing retailer has introduced a café bar and salon into its flagship store on the Tottenham Court Road in London. It has brought in partners to run both initiatives: “Saucer and Spritz” and “pin and Polish”. It argues that this frees it up to focus on what it is good at – fashion.

I could go on and on with examples – a quick search on Google will identify a number of interesting and perhaps “wackier examples” than I have highlighted. In an earlier blog I mentioned that IKEA had introduced the “Dining Club” concept in a pop-up store in the London area. This affords shoppers the opportunity to liaise with chefs in a café situation and where there is also space for a kitchen show room and an area for cooking workshops. Again it could be argued that this is about as far away from IKEA’s core business (household furniture items) as icebergs in the Sahara Desert.

In defence of such strategies however it can be argued that this is the modern face of retailing in response to the changing preferences and perceptions of shoppers. Younger shoppers, particularly those labelled as “millennials”, want to engage with products and brands; they have a desire to be entertained and find many aspects of traditional shopping to be boring and repetitive.

We have also seen this happening in other sectors such as sport. If we attend some of these events we see a package of entertainment being built around the core activity (the game, competition or duel). Sports such as cricket and rugby have changed the rules to simplify the sport. In the case of cricket it has introduced a couple of variations (e.g. shorter forms of the game) to deal with lower attention spans.

Similarly in the case of retailing we are witnessing many operators redefining what their business is all about. On a broader scale, particular in some regions of the world, we have seen this for many years now in the context of shopping malls and retail centres (discussed in our chapter on retail location in the text). These shopping malls are in many cases “cathedrals” of entertainment: containing features as diverse as indoor skiing slopes, children’s entertainment centres, cinema multiplexes and so on.

It follows that at the micro level of individual retail outlets, retailers also have to grapple with the need to create an immersive and interactive store selling environment. This has stepped up somewhat with the increasing use of technology such as Augmented and Virtual Reality.

We are likely to see more and more of such initiatives over the coming years as retailers constantly strive to be more innovative and entertaining in an attempt to attract and retain shoppers. This might be at the expense of investing further in customer service. Why bother with the latter if shoppers can acquaint themselves with all of the necessary comparative information on brand choices? However this is a topic for another day!