The Store recently held a webinar with FITCH London covering “A Very British Black Friday”. Black Friday is perceived as a frantic one-day sale, when shoppers lose control in the fight for bargains and retailers move mountains of stock to get a good chunk of holiday sales in the bag. This session was based on FITCH’s report that the Black Friday shopping phenomenon in Britain, shows the reality is somewhat different. EMEA ECD Alasdair Lennox and EMEA Strategy Director Aaron Shields showed the real losers in this game are retailers. Black Friday discounts have driven shoppers to open their wallets earlier, but not necessarily deeper, so the idea that they are just a major boost to UK holiday spending is flawed. While a small proportion of shoppers will always be willing to fight for a bargain, the majority are sensible shoppers happily buying online, at home. Lennox and Shields demonstrated that the long-term winners will be brands that shift their mind set from the hard sell to helping consumers to buy, offering a continuous experience online and in-store.

1. THE STORE -WPP
FAST TRACK BRIEFING SERIES
A Very British
Black Friday
TUESDAY, OCTOBER 4, 2016
11.00 EDT – 11.30 – EDT

2. THE STORE -WPP
FAST TRACK BRIEFING SERIES
A Very British
Black Friday

3. Introduction
Gwen Morrison
CEO, The Store - WPP

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8. Today’s
Session

9. Version 2
Highly Commended: PR Operation Impact
Aaron Shields
Strategy Director EMEA
Alasdair Lennox
Exec. Creative Director EMEA

10. Agenda
for today
1. Shopper behaviour
2. The business case
3. Defining the future
4. Post BF 2015 observations
5. BF 2016 predictions
6. Q&A

11. NB. This is a point-of-view
on the British retail
landscape. It was written
a year ago, prior to BF
November 2015
*With insights from the USA,
China and Singapore*
Version 1

12. Why is
FITCH
interested in
Black Friday?
We are fascinated in the evolution
of shopper behavior.
We are interested in how this
American phenomenon exports
and evolves in different cultures,
as we have x14 offices worldwide.
Designing the future.

14. Storm in a tea cup
Here is the reality:
The majority of shoppers in Britain
embarking upon Black Friday will
be in their dressing gown, holding
a cup of tea.
No queues, no hassle and no stress.

15. A Retail Week poll of shoppers who
made a purchase on Black Friday 2014
revealed that 58% did so via a computer
at home, 29% used a mobile device and
opted for home delivery.
Scaremongering stories of shoppers
wrestling in the aisles and police being
called serve only to remind the great
British shopper of what they should do
their best to avoid.
Storm in a tea cup

16. The truth is, Black Friday is a
positive experience for shoppers.
The same poll also showed that
96% of shoppers who bought on
Black Friday were either very or
quite satisfied.
Not exactly shopping pandemonium.
Storm in a tea cup

17. 34% of Black Friday shoppers visited a
physical store last year.
So what is it that drives these individuals
to take on the much-hyped Retail
Armageddon?
To get under the skin of people and
understand how and why people shop,
we need to understand their shopping
mindstates.
Dreaming, Exploring and Locating
Fear of missing out

18. We know that 75% of Black Friday
shoppers start the day with a strategy.
They have already been dreaming and
exploring online and they know what
they want and they have located it.
Now it is time to buy it.
For the majority this is online but,
as we know, one-third of shoppers
still go to a store.
The keenest queue up in the cold, waiting
for the doors to open; for the rest it’s the
battle to get there before stocks run dry.
Fear of missing out

19. Fear of missing out
This behavior is FOMO, the fear of missing out.
This acronym was coined a couple of years ago to describe
a psychological disorder caused by the onward march of
technology, but its use is certainly appropriate for
bargain shopping within a time-limit.
#FOMO

20. Black Friday originates from the US
major lifestyle event
Now that many retailers open up on
Thanksgiving Day, the appeal of Black
Friday as a day for deals appears to
be waning. However, the appeal of
spending the day with family and good
friends is alive and well, from families in
matching outfits to special breakfasts
and sleepovers the night before.
It is more about tradition than
transactions over there.
Not for everyone

21. Homegrown online retailer Alibaba
has been making billions since 2009
by turning an unofficial holiday
called Singles’ Day into the biggest
online shopping day of the year.
As Alibaba eyes international expansion,
we could see yet another discount day
being added to our calendars.
Not for everyone

22. Amazon started offering Black Friday
discounts in the UK in 2010
Prime Day is a one-day-only global
shopping event exclusively for
Prime members.
So, Black Friday is a fabricated discount
day in the UK and certainly no holiday
unless the Queen decrees it.
Not for everyone

23. “It is not in the industry’s interest to
continue to grow the pace of Black
Friday at the expense of other weeks…
You want more steady trade and
obviously you want more of it at full
price…”
JOHN LEWIS CEO
Andy Street
Black Friday steals
Christmas Sales

24. Black Friday sales are predicted to reach £1 billion
in the UK this year, up from £810 million in 2014.
So surely it must be good news for retailers?
Actually no.
Black Friday discounts drive shoppers to
spend earlier rather than to spend more.
Black Friday steals
Christmas Sales

25. Black Friday steals
Christmas Sales

26. “Black Friday in the UK is pointless…
It seems to have arrived online and
although we did not run promotions
last year, we saw a lot of people on high
streets... But all it seemed to do was
bring forward sales, so the week
of Black Friday was good and the
following week was bad and if you
average them together sales were fine…”
PRIMARK CEO
George Weston
Black Friday steals
Christmas Sales

27. There was a sharp drop-off in demand in the
following weeks. Like-for-like sales grew just
0.1%, compared with the estimated 2% in
the 18 weeks to 3 January.
As a direct result of Black Friday discounting,
Argos missed its sales forecasts and
recorded reduced profits.
Homebase sales for the 2014 Christmas
period were up only 0.6%, despite heavy
Black Friday promotion. Its shares fell 7%
at this news.
Black Friday steals
Christmas Sales

28. Marks & Spencer clothing and
homeware sales were down 5.8%12
in the Christmas period of 2014, and
there were similar stories amongst
the supermarkets:
Marks & Spencer (ex)CEO
Marc Bolland blamed Black Friday
discounting for much of the drop
in sales.
Black Friday steals
Christmas Sales

29. Heavy discounting, unpleasant retail
experiences, disappointment, late
fulfillment and high returns are a perfect
storm for erosion of brand equity.
Black Friday 2014, Curry’s PC World
experienced web traffic that increased
fivefold from 2013.
At midday, customers queued for
up to an hour, listening to the message,
“We’re really sorry that the huge demand
for our deals means you’re having to wait.”
Erosion of brand equity

30. At Tesco, deals went live at midnight but
the website was down for several hours.
For M&S, delivery times had to double.
Oasis’s Black Friday 2014 resulted in
a 50% return rate from all orders.
So the commercial case is weak for
retailers, the experience can be poor
for shoppers and brand equity is likely
to be eroded.
Surely there must be a backlash?
Erosion of brand equity

31. Yes, there are signs of a potential backlash.
The most interesting example is from America, where REI outdoor
stores are shutting their doors and giving staff the time off.
They recognize the importance of keeping staff happy in creating
long-term sustainable advantage.
The Backlash

32. Defining
the future…

33. We predict The British Black Friday will
become purely the territory of retail discounters.
It will turn into yet another cut price period
in the run-up to Christmas.
Black Friday online will grow and spread.
Last year, Cyber Monday appeared and this
year, it looks as if some online retailers are
extending Black Friday even further into weeks.
Black Friday will become
the domain of discounts

34. The long-term winners will be the brands that can offer
a fluid and rewarding experience online and in-store.
Success will require increased access to information
online, together with a gratifying and unique
physical experience in-store.
It also requires a major shift in mindset: no longer are
retailers selling, but they are helping people buy.
Winning retailers will offer
a continuous experience

35. More than £3 billion was spent
Over Black Friday weekend in the UK.
Black Friday was the UK’s biggest
Day for online retail ever.
Cyber Monday boosted online
traffic by 60 per cent…
Amazon claims 2015 Black Friday was
its biggest sales day in the UK ever.
CityAM Black Friday UK Sales Report
Post BF 2015 Observations

36. However…
At least 15 retailers’ websites couldn't cope.
John Lewis site went down around 3.20pm on 27
November, and according to one estimate, the
company might have lost some £2.8m due to this.
Argos site slowed down and its page load time
exceeded 10 seconds, when compared to
0.5 seconds page load time for Amazon.
Post BF 2015 Observations

37. A continuation of our 2015 predictions
What will the BREXIT uncertainty affect spending?
The evolution of omnichannel
2016 Predictions

38. and here is your FITCH
shopping guide for this
years Black Friday…
enjoy!

39. Discussion & Questions

40. Thank You
GWEN MORRISON
CEO, The Americas & Australasia
gwen.morrison@wpp.com
@gmorrison5
@thestorewpp
ALASDAIR LENNOX
Executive Creative Director, EMEA
alasdair.lennox@FITCH.com
@isawthismorning
AARON SHIELDS
Strategy Director, EMEA
aaron.shields@FITCH.com