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BizReport : Ecommerce archives : November 17, 2015

A third of retailers consider Black Friday 'unprofitable' and 'unsustainable'

Unprofitable and unsustainable - those are the words that almost a third of US and UK retailers have used to describe Black Friday reveals a new report from LCP Consulting.

by Helen Leggatt

Retailers are divided over Black Friday. A new report from LCP Consulting, 'The Omnichannel Journey', reveals that 31% or more of retailers in the US and UK agreed, or agreed strongly, that 'Black Friday is an unprofitable and unsustainable promotion'. Thirty-eight percent disagreed, of which 13% disagreed strongly.

However, the heavy discounting and unpredictable surges in demand can, combined, make it difficult for retailers to maintain margins and also meet customer expectations. Furthermore, those retailers that lack the infrastructure and capabilities to provide customers what their brand promises run the risk of alienating customers and harming long-term sales.

According to LCP Consulting's report, that a third of retailers believe Black Friday is unprofitable and unsustainable indicates they have "learnt more about the true economics involved" and that "they have moved beyond measuring success according to sales or gross margin and are instead focusing on net margin and profitability in assessing effectiveness".

Either way, the report does conclude that Black Friday is here to stay and that this year sales will break the £1 billion mark. But, retailers with omnichannel business models will be the winners.

"The retail industry continues to be in flux as it adjusts to the demands of digital commerce and the resurgence of the empowered customer," said Stuart Higgins, retail partner at LCP Consulting. "Omni-channel business models are enabling the winners to drive significant sales and profit growth but those who have not yet embarked on the journey face an uncertain future in the face of growing service expectations."

Image via Shutterstock

Tags: Black Friday, holiday 2015 trends, omnichannel, retail

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