Black Friday drew in the shoppers, but at what cost to margins?

This year’s Black Friday event was bigger than ever with initial data showing transaction numbers and sales both up.

Black Friday was a multi-day event for most retailers that participated, spanning over the whole weekend – and beyond in certain cases. It was also notable this year that discounting was, in many cases, more like a blanket sale than a one-day spectacular. Retailers like Debenhams and House of Fraser offered between 20 and 40% off many lines, including major and highly desirable brands. With less emphasis on ‘when it’s gone, it’s gone’ promotions, shopper footfall was spread over a number of days and we did not see the heavy concentration of crowds and queuing experienced a few years ago.

While high streets and shopping centres were busy, we did see a further migration of Black Friday towards online. For retailers, online events are easier to plan and manage, help avoid any in-store disruption and security issues caused by crowds.

The scale of the Sale at many retailers this year highlights that weak October trading has shaken many retailers’ nerves. In many cases we suggest Black Friday was pre-Christmas discounting by a different name and while there is no doubt that Black Friday stimulated sales growth, as ever, the question is how much erosion has been caused to gross margins and whether we should expect retail casualties in the New Year. Sadly the signs are not encouraging.