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Black Friday an own goal for retailers

25 Nov 2016

Premium high street retailers leading Black Friday backlash



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Black Friday weekend has become an own goal for retailers, but a handful of premium high street retailers are fighting back, rejecting the traditional sales bonanza in favour of VIP weekend promotions pre or post, according to a retail expert from London Business School.

Elizabetta Camilleri founded Shopological with Co-Founder Emilio Sanz, in London Business School’s Incubator after studying for her MBA at the School. Shopological curates fashion and beauty promotions online and on the high street, and is predicting that the number of premium retailers rejecting Black Friday is set to increase.

Ms Camilleri explains: The purpose of Black Friday discounts from the retailer perspective is twofold: attract consumer attention and get them to buy from you. This works if the discounts are a differentiator from your competitors. But if every retailer is doing it, what was a sales advantage disappears and quickly becomes an own goal.”

That’s why a handful of premium retailers such as Jigsaw, MaxMara and Zara did not join the Black Friday bandwagon last year, following in the footsteps of the luxury brands who have always rejected Black Friday, and trying what Camilleri describes as “a smarter strategy”, such as VIP promotion weekends, rotating discounts on a limited number of items and free courier delivery on instore purchases.

Black Friday has become an interesting “test of game theory”, Camillieri says.

It’s not the first time retailers have tried to pull back and resist the rising tide of Black Friday deals. “But it has usually ended up a game of chicken,” Camillieri explains. “Retailers have held off until the last moment and folded, capitulating under Black Friday peer pressure as their competitors launched tempting deals. But it’s a loss leader, fuelled by facts like the fact that 25% of UK fashion stock was left unsold by January last year.”

So why aren’t more retailers fighting back? Well, not all retailers are equal when it comes to the power to push back, as Camillieri explains.

“Retailers’ ability to switch from Black Friday discounts to a more differentiated and ultimately more profitable, discounting strategy depends on three factors: market segment, premium brand power and smart pricing strategy.

“Where you are in the market matters. If you are a premium brand you command customer loyalty. And your customers know that finding their size in the January sales is very unlikely. Plus most November shoppers are buying Christmas gifts, so if you don’t offer a Black a Friday deal, buyers of your brand won’t hedge their bets holding off until January with the very real risk of winding up empty handed.”

If you’re a Walmart or an Amazon, you probably don’t have the same options, Camillieri concedes.

But while the trickle of premium high street retailers may therefore turn into a stream not a river, that counter-stream could nonetheless prove significant – a sign that we could even yet see the Black Friday tide start to turn.


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