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Does Black Friday really have a beneficial impact on overall sales performance?

Last year’s Black Friday created quite a stir in the UK. With many stores offering vast discounts across large amounts of their stock, companies were faced with high demands from customers. Already retailers and MPs have been questioning plans for this year’s Black Friday due to such pressure and chaos. So just how valuable are highly focused, short duration promotions, such as Black Friday, in terms of their impact on overall sales performance?

Arrows on screen black friday

Whilst many brands noticed increases in profit over the duration of the Black Friday weekend, as with all short term promotions, companies must recognise that the scale of sales is only on a temporary basis. John Lewis achieved their most lucrative week in their 150 years of trading but the company’s boss, Andy Street, commented on the disruptive pattern of sales it created.

Such promotions entice rapid profits, which may have a greater impact on sales performance than in the past; however, they set up undesirable irregularities in performance. These extreme activity spikes can be beneficial for retailers at the time, but become hard to maintain during the period directly afterwards and further into the future.

Continued financial success not guaranteed

Man drawing arrows on chart Black friday

After times of huge promotions it is common for sales to decline as customers have the items they wanted. Holding onto customers and maintaining a level of attraction to your business is vital though, whether you are holding promotional events or not. Although many companies saw large profit increases over the Black Friday weekend, in the majority of cases this started to decline towards the approach of Christmas and into January.

Financial success should be more targeted towards continued and steady growth rather than one-off solutions to big profit margins. Promotional events cannot guarantee continued success for brands so businesses need to work towards marketing and financial strategies which can benefit them throughout the year.

Outbreaks and issues put strain on retailers

To use last year’s Black Friday as a direct example, the buzz of huge sales can cause unmanageable commotion, leaving companies to face extreme situations. Outbreaks between customers and physical arguments with retail staff were common across this traditionally American spending holiday, within the UK. Stores nationwide were placed under large amounts of strain to deal with this chaos.

Rapid promotional sales can be expected to result in certain problems so it is all about preparation and comprehensive planning before going ahead with such events. Although sales are initiated with the intention of gaining profit and brand awareness, they can place specific demands which wouldn’t otherwise be present. Allowing for extra staff to help handle bigger crowds is essential, as is budgeting for higher payslips to account for longer opening hours.

Customer confidence in a brand can decline

Negative impacts on customer confidence are the last thing any company wants but short duration promotional events can be a mixed blessing. Due to heightened sales action, it can be difficult for many companies to cope. Retailers under pressure last Black Friday were challenged with customer complaints when websites crashed due to demand.  Issues such as these can have wider financial implications in terms of customer dissatisfaction and lost sales.

Upholding long term habits and promoting a high quality of service should be of complete importance to retailers. As the director of ecommerce at BT Expedite, Asif Khetani, puts it: ‘Days with huge sales spikes have been fraught with issues for retailers who have been caught unawares. Customers don’t just want great deals, they want great experiences. And in today’s ultra-competitive environment, they need great experiences to keep them coming back’.

Long term habits need to be focused on

 

Regardless of the size of the business, retailers everywhere can feel the strain of such highly focused, short duration promotions. Adjusting business strategies to cope with such events on a wider scale is necessary. Employing IT systems which deal with unexpectedly high or abnormal spikes in product sales should be a key consideration also.

Here at Options Mail Order our software supports rapid sales spikes by providing scalable solutions that take into account load and usage. Understanding how to cope with promotional periods and effectively managing these is all part of upholding a successful and profitable business.

Learn more about how we can help your overall sales performance by contacting our team. At Options Mail Order we are experts in multichannel retailing, and can generate a great shopping experience for your customers. Visit our blog for further business advice and tips for SMEs.

Posted Friday, 30th January 2015