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Britain's Black Friday genie now out of the bottle

Tue, 27th Jan 2015 12:17

* 2014 saw Black Friday take off in Britain in a big way

* Retailers discounted too much and struggled with orders

* Stores planning more selected discounts for 2015

By James Davey

LONDON, Jan 27 (Reuters) - Britons literally fell overthemselves for "Black Friday" bargains in November, so retailersneed to make the discount day imported from across the Atlanticwork for the industry.

Black Friday took hold in Britain in a major way for thefirst time last year, as store groups sought to match thepromotions of big U.S. online retailers such as Amazon and use the event to kick-start interest in Christmas shopping.

But many were not prepared for the level of demand on Nov.28, which saw shoppers queuing overnight, scuffles breaking outin stores, websites crashing and delivery operations overloaded.

Not only did that frustrate customers, but it also left manystore groups selling more stock at a discount than theyintended, and then finding there was less demand for full-pricegoods in the following weeks, hitting their profit margins.

Industry data showed the extent to which the traditionalbuild up of sales ahead of Christmas was skewed. While BlackFriday drove November retail sales growth to a three month highof 2.2 percent year-on-year, December's rise of 1.0 percent wasthe weakest outcome for that month since 2008.

With customers' expectations raised, and online retailerslikely to keep up the pressure, there seems little prospect ofBlack Friday -- named after the day of the year when U.S.retailers traditionally become profitable -- fading away.

"We do not believe that the genie can be put back in thebottle," said retail researcher Conlumino.

So Britain's stores are going to have to do better, and thatmay mean learning from those that coped well, such as electricalgoods chain Dixons Carphone.

It carefully planned targeted promotions with globalsuppliers on goods such as Samsung TVs, De Longhi coffeemachines and Bose speakers, allowing it to achieve a sales boostwhile maintaining profit margins.

"I think it's here to stay. It's something that we need toplan for and get used to," said Dixons Carphone finance directorHumphrey Singer of Black Friday.

"We pretty much start planning now for this year."

COPING STRATEGIES

Dixons Carphone's success was in contrast to the experienceof many other general merchandise retailers on Black Friday.

"It caused a huge pull-forward of sales, it straineddistribution networks, it undermined consumers' willingness topay full-price at Christmas and it ruined perceptions of onlinedelivery reliability," said independent retail analyst NickBubb.

Marks & Spencer, Britain's biggest clothingretailer, was the highest profile casualty, with its hugedistribution centre in Castle Donington, central England, throwninto chaos.

Unable to cope with the spike in demand, automated pickingand packing failures delayed the delivery of goods orderedonline. Disappointed customers lambasted the firm on socialmedia and a subsequent loss of sales was a major factor in thefirm missing forecasts.

Chief Executive Marc Bolland lamented that at any other timeof year "you don't get that artificial Christmas tree, wrappingpaper and a dress together in one order."

But he knows it's the company that must adjust.

"If consumers like to shop in that way more, then asretailers we need to find answers to it," he said.

Analysts say this year retailers may put more focus onspreading the home delivery of goods ordered on Black Fridayover a longer period and on increasing the appeal of "click andcollect" services, where ordered goods are picked-up in store.

Household goods chain Argos missed Christmas salesforecasts after reining in promotions in the wake of BlackFriday. That protected profit margins but hurt sales.

Chief Executive John Walden, who as an American is a veteranof Black Friday, reckons retailers will be more selective aboutwhat they put on sale this year -- "balancing the things thatmake money versus the things that may not."

Black Friday delivered the biggest week of sales indepartment store John Lewis' 150-year history.

Its boss, Andy Street, says the event will stay but reckonsit may be tempered this year, perhaps more focused around itstraditional electricals heritage.

"Customers got a very good deal," he said. "But standingback from it all, you actually have to say: 'Is it good for theindustry to concentrate so much business in that one day andthen have a relatively flat period afterwards?' The answer isprobably not." (Editing by Keith Weir and Mark Potter)

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