Retail environment
UK retailers have black outlook on Black Friday
The number of UK retailers that see Black Friday as an “unprofitable and unsustainable promotion” has doubled over the last 12 months – rising from 32 per cent in 2015 to 61 per cent this year, according to new figures.
But the opposite is the case in the US where the discount shopping event originated as retailers remain more optimistic about its business value, with only 35 per cent viewing Black Friday as unprofitable.
The research, published in the latest Future of Retail report by LCP Consulting, was based on interviews with 100 leading retailers in the UK and the US. The study also found that a third of UK retailers have witnessed a rise in the number of returns over the past year, with the majority stating that they see an increased proportion of returns following peak trading periods such as Black Friday.
The recent rise in online sales around Black Friday has also contributed to this trend, the report noted. It predicted that five million parcels purchased on 2016’s Black Friday (25 November), will be returned, with London generally sending back the most (up to 27 per cent of orders), and Scotland returning the least (19 per cent of purchases). This will result in retailers having to manage an additional 50 per cent of daily returns volume during the week immediately following Black Friday, LCP Consulting predicted.
Next day deliveries are also expected to be up 20 per cent from last year, the company forecast, adding that only half of the anticipated 3.5 million next day Click and Collect parcels will actually be collected by customers the next day.
Stuart Higgins, retail partner at LCP Consulting, observed: “The true profit impact of Black Friday is not driven by sales increases and gross margin; it is driven by the additional operating cost and the complexity of managing operational peaks. Managing picking and packing volumes is one thing, but you also need to have contingency in place to ensure delivery against service promises – no matter what the eventuality.
“Retailers must also manage the processing of returns in a timely manner to credit the customer, and to get the merchandise back on sale to avoid the risk of having to mark down,” he added. “Fashion returns are even more important, as these can be as high as almost two thirds of orders.”
