Likened to a real life version of The Hunger Games, where frenzied shoppers will do just about anything to get their hands on a bargain, Black Friday is often eyed with suspicion by retailers. The big shopping weekend, where Black Friday is followed by its online counterpart Cyber Monday, sandwiches US and Canadian festival, Thanksgiving. Until a few years ago the concept wasn’t particularly well received in the UK but the internet boom and the wider adoption of US culture and customs by British consumers has to lead to Black Friday now becoming a benchmark in our own retail calendars. As the day approaches, the question remains as to whether Black Friday is actually favourable towards businesses and consumer.
No sign of recent recession
The UK economy is still on the road to recovery, but if you judge its health based on pre-Christmas spend figures alone, you would think we were flourishing. In 2014, spending on Black Friday surpassed industry expectations by around 50%, with shoppers spending an estimated £810m in a single day. This year, Black Friday is expected to bring in nearly £1bn in the UK alone – setting new spending records. But what drives this frenzied approach to bagging a Christmas bargain?
FOMO (fear of missing out)
Payments provider, Sage Pay, released a recent Yule be Sorry Infopaper on what drives consumers to spend on Black Friday. In the paper, Vince Mitchell, Professor of Consumer Marketing at London Cass Business School comments, “Black Friday harks back to the days of the hunter gatherers. When resources were scarce we had to be selfish, physical fighters to survive. When we come off the high street and out of primordial mode, we often realise we’ve gathered things we don’t need”. This rings true as 60% of Brits come home with items they feel like they don’t need.
The adoption of Black Friday itself reveals an innate FOMO among consumers, keen to capitalise on potential bargains as the festive period looms. But is bagging a bargain always a good thing? The evidence from Sage Pay’s Infopaper suggests otherwise:
- 60% of shoppers regret buying a bargain that they never use or wear
- 39% of shoppers say the prospect of getting a bargain is too good an opportunity to miss (FOMO)
- 50% of shoppers spend more than the intended to on Black Friday and feel guilty about it
It would be safe to say that shopping on Black Friday weekend doesn’t give shoppers a boost of happy shopper endorphins – unlike other instances of retail therapy.
Paying on debit and credit card is by far the UK’s favourite payment method. With £1 in every £4 spent online and the other £3 influenced by an online transaction (source: Sage Pay Payments Landscape Report 2015), it is clear consumers love shopping from their armchairs. With 71% of Brits preferring to shop online rather than in-store, it looks like our perception of money has skewed.
The online world distorts the realities of money, removing the guilty we often associate with face-to-face spending. Although some face-to-face functionality – like contactless card payments – has increased by 275% in the past year, it’s clear that as a nation we love online payments. However, this does mean that technology is the intermediary between our intentions and our actions, so activities like shopping are too easy to do. In the Sage Pay Yule be Sorry report, Vince Mithchell said,
spending so much time online is beginning to divorce us from the consequences of our actions.
This could explain why Black Friday shopping is met with such a mix of emotions and why 13% of consumers feel so guilty that they will cover up how much spent.
Is Black Friday worth it for retailers?
Small businesses should approach the Black Friday discount frenzy with caution. Reducing prices could be detrimental to long-term profit margins. Your business needs to be as healthy as possible during the festive period. Slashing prices to compete with the larger companies is not only a financial risk, but one of resourcing too. You also may not have the capacity to process a huge influx of orders.
Tellingly, big business Asda, who claim to have introduced Black Friday to the UK, are pulling out of the festivities this year, preferring instead to focus on customer retention and not on a one-day sales battle.
While Black Friday remains a fun day in the retail calendar, don’t put all your eggs in one basket.