Cyber Christmas means carnage (to paraphrase Babe movie) as online sites and stores hit by Black Friday shopping frenzy

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As Black Friday sales surge in the UK, Retail Times provides an update on the action in the stores and online plus more retailer advice

Jon Copestake, retail analyst at the Economist Intelligence Unit, said: “Reporting so far on Black Friday in the UK has been chaotic, with carnage in some stores prompting calls for the police to help manage the situation. Additionally sites from Currys to John Lewis and Tesco have suffered traffic outages due to unexpected demand. Despite all the preparations it would appear that the sheer numbers of people looking for bargains on this year’s Black Friday have taken everybody by surprise.

“From a retail perspective the frenzy of interest has mixed implications. Take up on sales today is likely to undermine the potential for purchases later in the Christmas shopping period. The waiting times and overloading of stores is also unlikely to be good for the reputations of the retailers involved. Tesco in particular is already coming under criticism for mishandling store numbers. But it does highlight the continued enthusiasm consumers have for bargains or sales and, given the choice between making a sale now or relying on future Christmas dates most retailers would prefer to have the money now. As a precedent this may mean that sales fatigue sets in in coming months or years, with a situation emerging where price-aware consumers become increasingly difficult to engage in purchasing unless they are in the form of some sort of sale or discount. ”

Michael Allen, VP of APM for Dynatrace, said: “As anticipated, Black Friday has put added pressure on digital channels, meaning that even the largest brands websites, such as Currys and Argos, have struggled to cope. These failings directly impact both top line revenue and brand perception. Customers today are as likely, if not more, to shop online or with their mobiles as they are in-store. In fact, we have just conducted some consumer research, which showed that, in the UK, over a third (34%) of shoppers will do most of their shopping online; while a further 31% will use a combination of mobile, online and in-store. Brands know that their digital channels are strategic, but seems like they still struggle to be fully prepared. Digital channels demand the same level of planning and commitment as, for instance, physical stores hiring extra staff on the floor today to cope with demand. In addition, when executed well, Web sites and mobile apps barely need additional staff for this important day. ”

Greg LeTocq, founder of brand new digital gift card service, www.Giftcloud.com, said: “The long weekend of Black Friday, Sofa Sunday and Cyber Monday is always going to be a huge attraction for the crowds when it comes to electronics and homeware, but 2014 has been a year in which we have seen more and more new industries picking up on this trend to offer special deals to commemorate the iconic discount period. It’s brilliant to see that those looking to freshen up their hairstyle, pick up some cheap pet food or accessories or, of course, begin their Christmas shopping can do so with some cut price gifts.

“This is a way of stores and brands jumping on board to get a slice of the action this year and pull customers in. As far as consumers are concerned, a deal’s a deal – and the more the merrier. Considering the potential increases in basket values, the boost to online traffic or footfall and the promotional opportunity, it’s a chance that shouldn’t be missed. Many big brands worry about the effect of cutting prices on their quality perceptions, but this weekend is arguably the one and only time of the year when even the biggest consumer brands and luxury retailers can get away with taking part in the spirit of Black Friday. Those who decided against it this year are no doubt kicking themselves as they watch the results of great deals on the news today.”

Damian Hanson, CEO at One iota, said: “Embracing in-store technology is essential if retailers are to maximise the sales opportunity this Black Friday. Without it, the sale ends once the shelves have been cleared; traditionally when a store runs out of stock in a certain colour or size, the shopper will be left disappointed. By using technologies such as iPads carried by sales assistants, or by providing in-store kiosks, retailers can give customers access to the full range of stock that is still available online to convert every potential sale.

“With British consumers expected to spend more than £6,000 every second this Friday, it will be interesting to see which retailers really capitalise on this and apply technology to make the most of the opportunity.”

Maureen Hinton, global research director, Conlumino, said: “Having been first introduced to the UK market by Amazon just a few years ago, Black Friday and Cyber Monday have been increasingly embraced by UK shoppers. Shoppers across the pond have traditionally viewed the Thanksgiving weekend as the start of the Christmas shopping season and – while UK shoppers don’t have the connection to Thanksgiving – the pro-activity of UK retailers with their heavy marketing and deep discounts, allied to the rising influence of e-retail, has played well to an enduring sense of austerity. According to our research, conducted in partnership with SAS, just under a fifth of shoppers have long planned to purchase Christmas gifts online on Cyber Monday as part of their Christmas shopping cycle, highlighting that the success of the weekend is down to a strong cocktail of impulse-led and planned purchasing behaviour.

“Nonetheless, over two-thirds of UK shoppers feel that Christmas discounting is losing its impact, which is hardly surprising given that the last few years have seen retailers engaging in more and more promotional activity throughout the year. Against this backdrop, it will take deeper levels of discounting on the products and brands that shoppers actually want to effectively drive demand this year; over half of consumers are planning to shop around for the lowest price once they’ve picked their Christmas gifts.

“The weather is a major concern for retailers in the run-up to Christmas, with 68.9% of large retailers saying that it has a medium-to-high influence on performance and, indeed, aside from the traditional high profile offers on electricals products, we expect strong discounting in clothing. Many fashion retailers will be looking to this weekend as an opportunity to get back on track, following an unseasonably mild start to the autumn/winter season, which has impacted demand for products such as jumpers, coats and scarves.”

Professor Chris Edger, retail expert from Birmingham City University, claims customers will be the only winners on Black Friday, where they will be able to gorge on super-cheap pricing and ‘fill their boots’ on electrical and white goods.

“So how useful is Black Friday to retailers? Defensively it will become a must – unless companies want to lose market share to their rivals,” said Edger. “However, based on the evidence in the US, Black Friday will become a ‘vampire retail squid’ – spreading out throughout the month sucking margin out of November trading.

“Indeed, Amazon – setting the trend in the UK once again – has already started its ‘run-up’ promotions to Black Friday on Monday 24 November.

“The margin consequences of this move – as consumers become addicted to November discounting and expect it as a matter of course – could have grave consequences for profitability over the longer term for some retail players.
“Although, once again – those organisations with efficient click’n’brick and on-line models – will benefit more from the November ‘feeding frenzy’ than those that don’t!”

Bridget Treacy, managing partner and head of privacy and cyber security, London, Hunton & Williams, said: “Retailers are under constant attack and can be easy targets for cyber criminals, putting them and their customers’ data at risk. At this time of year, in particular, retailers need to redouble their efforts to monitor their security systems and remain vigilant.

“Aside from direct attacks on the retailer’s own systems, service providers to the retail sector can be an area of vulnerability. Retailers need to think carefully about the many service providers who may process customer data for them, and ensure that there are no chinks in the chain of data processing that supports the business.

“Internal security risk is a further area of vulnerability. Disgruntled staff can cause real damage, as can well-meaning staff who simply make mistakes, potentially exposing customer data.

“As businesses becomes ever more global, security incidents may raise legal issues across several jurisdictions. Increasingly, security breach notification is expected in Europe, even if not yet a mandatory legal requirement in all countries. Regulators ask ever more probing questions on security, and increasingly focus on arrangements for subcontracting data processing to service providers. Regulators will ask to see underlying contracts and, even where breaches do not need to be reported, may still have the power to impose hefty fines where the necessary contracts are missing, or inadequate.  Under the proposed EU data protection Regulation, fines of up to 5% of global revenue could be imposed for serious security breaches.

“Businesses must be able to recognise breaches, and know what to do when the inevitable occurs. Trying to figure this out in the midst of a crisis does not end well. Defending a business against cyber security risks also requires well-rehearsed processes for dealing with an incident. We are seeing companies running breach scenario planning and training exercises – often involving senior level executives. Breaches have a serious impact on reputation, and these companies are focused not just on preventing breaches, but ensuring that they plan for the best outcome should the worst occur.”

Dan Wagner, e-commerce veteran and CEO of Powa Technologies, said: “With the retail sector’s performance faltering all bets are placed on Black Friday and Cyber Monday to make up for lost ground. Large-scale discount days do indeed lead to a spike in sales on the day, but that is not enough to revert the bigger picture of the industry’s performance. Retailers need to open their eyes to the transformation of the retail landscape and adopt long-term strategies that fit into the changing consumer habits.
“Mobile commerce is fast becoming the dominant channel for consumer engagement. Mobile platforms have changed not only how people shop, but have also enabled them to look for deals and bargains on an ongoing basis and make the most of them on the spot. With greater levels of control and freedom offered to consumers, retailers hoping  that individual sales events are enough to make up for a year’s profit loss risk never making it into the black.”
Jes Breslaw, director of marketing and strategy at Delphix, said: “Christmas must be a wonderful time to be an Amazon shareholder. Signs of the company’s undisputed festive reign are everywhere. As high-street retailers look to compete in the Black Friday, Super Sunday and Manic Monday retail frenzy, aggressive discounting and attempts to match the retail giant will simply squeeze small profit margins even further.
“To be successful, brands recognise that they can’t compete with the darling of retail on price-point alone. Instead, it is those that have the supporting infrastructure and processes in place that will be able to innovate with business applications and leverage business intelligence to increase market share.
“Over the next four days, it will be interesting to see which retailers are best to equipped to maintain customer loyalty and capitalise on consumers fondness for the convenience of online shopping. A single feature can win a customer,  whether its recommending products, saving your measurements, or reminding what you bought Grandma last year. At the same time, a bug, error or poor experience can lose your most loyal customer in an instant. In this ultra-competitive world, retailers need to continuously deliver innovation whilst ensuring quality in order to maximise the potential that Christmas retailing holds.”