The price of Black Friday

Black Friday is already in full swing. How will it perform, given the very real and growing pressures on household budgets? The portents are not good. Consumers don’t care about technical definitions of recession - for them, it is visceral, in purses and wallets, and how they relate to price tags. And most have been in recession for some months. Then there is today’s Which? report about research showing the vast majority of Black Friday offers were either the same price or cheaper earlier in the year. In other words, the promotional noise is much more style than substance.

Despite all of this, I think Black Friday will be better than might be expected this year. Most consumers are acutely aware of the need to manage their spending, and changes in prices. They understand that if they are to mark Christmas in the way they want, they will need to shop more strategically. And despite Which? (and its justified reputation for thorough research), enough will view Black Friday as an opportunity to make their smaller budgets go further.

The comparative numbers for last year are demanding. November 2021 spend by value increased by 9% year-on-year, which will not be easy to beat. Nevertheless, with non-food price inflation currently running at around 7.5%, this year’s promotions will be markedly more expensive than last year’s, and this will help push the numbers up.

If anyone thinks this is good news, it’s not!! Consumer spend is fundamentally constrained. A good Black Friday is negative news for Christmas because it will simply suck spend forward, and at lower margins. By the time the Black Friday promo POS comes down and the Christmas version goes up, those spending pots will be smaller. Those retailers who have either opted out or have managed their Black Friday very tightly indeed will be in a reasonably good place. Those making too big a splash may well begin regretting so quite quickly.

Effective management of promotions requires detailed, AI-driven demand forecasting. This applies as much to Christmas as to Black Friday. Get in touch for an informal chat about how demand forecasting can transform your outcomes over these critical promotional periods going forward.