Never mind the Yanks try the subtle approach

With several hyped-up flash-sales days such as ‘Black Friday’ and ‘Cyber Monday’, sales were expected to be strong. However, these events appear to have had the opposite effect, resulting in an overall drop in Christmas year-on-year profits for many retailers and impacting margins across the board.

Festive shopping days have been a long standing tradition in the US, with the first Friday following Thanksgiving hosting massive sales since the early 2000s, to make the most of the associated public holidays. The last few years have seen these events make their way across the Atlantic, but on this side of the pond, retailers must surely be asking themselves whether there is any real reason to continue building their sales strategies around non-UK bank holidays and an annual tradition that we don’t celebrate.

A major issue with such short term, high impact sales strategies is that for multi-channel retailers, their supporting logistics networks lack the flexibility of the online sales platforms which generate deliveries for them. The situation this year has been further compounded by a combination of other mitigating factors such as driver shortage, winter weather, and already overburdened road networks.

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For retailers, the heavy discounts required to stand out from the crowd means that profit margins are squeezed, and therefore that the resulting upturn in volume of sales at peak times doesn’t necessarily translate into a noticeable increase in profit over the whole period. The challenge in getting deliveries to Customers on time can then put unwanted pressure on retailers, potentially damaging their brand reputations in the long term if delivery promises aren’t met. Add in the potential loss of sales on regular shopping days in the run up to Christmas, and the arguments against the Cyber Weekend begin to stack up.

The answer for retailers insistent on following the American trend for festive shopping days may be the development of a variety of bespoke delivery options. Doing so could help ease the burden on logistics networks by spreading out pressure at peak times and removing the complicated and time consuming ‘final mile’ deliveries for Click & Collect customers. However, even a close consideration of how significant spikes in demand could be dealt with is not a sure-fire way of avoiding parcel congestion. Delivery vans, drivers and warehouses come in finite quantities and will never be able to expand and contract at the same rate as virtual sales environments.

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The risk of being unable to deliver on promises (quite literally) and the potential resulting damage to brands was certainly pushed to the top of the retail agenda during Christmas 2014. Perhaps a more cautious approach in the future would be for retailers to take the focus away from US sales days and instead target offers at loyal Customers over a variety of days. Doing so may spread out the sales peaks, easing pressure on logistics networks but still bringing in additional custom before the Christmas sales rush. This pre-Christmas period will always be a high pressure time for retailers, but a more subtle approach may help to avoid the more damaging aspects of the retail stampede.