Leisure is the real winner on Black Friday

Did you know it is Black Friday today?

Of course you have, you couldn't have missed it.

Expect extremely early starts for those working in shops and delivering items, carnage at stores across the UK and a potential bargain on an item that you didn't really need until you heard it was Black Friday a few days ago.

I first experienced Black Friday 7 years ago when I was in New York around the Thanksgiving holiday. You simply couldn't avoid it. Not wanting to miss out, I boarded a coach to a retail outlet in Newark for 1am! Dedicated I know, but I was in search of a bargain and had a mid-morning flight, so it made sense to use up the night (who needs sleep anyway?).

As I arrived at the outlet I was shocked. Stores were a mess, some were already closing as they had sold out of stock or the crowds were simply too much. The food halls were all completely packed and the sidewalks (pavements) were full of eager bargain hunters pacing up and down in search for the best deals. I witnessed children being dragged around and the general mood amongst the consumers was highly competitive and a little nasty.

After browsing many stores, with no success and on an empty stomach, I decided that that was enough for me. I jumped back on a coach to New York and was the first in line to view the sunrise over New York from the Empire State Building - simply breathtaking.

I returned to the UK slightly dishevelled from the whole Black Friday storm and was a little relieved to find out that we hadn't discovered it in the UK yet.

That was until Amazon introduced Black Friday in 2010.

In 2010, Amazon.co.uk introduced Black Friday discounts online, with great success. It wasn't long until Curry's PC World jumped on the bandwagon in 2012 offering online discounts and more recently (2014) John Lewis and ASDA began to promote their deals.

Black Friday 2015

2015 looks set to be the biggest Black Friday yet. Retail researcher Conlumino is forecasting that it will generate UK sales, both in stores and online, of ￡1.6 billion pounds, up 20% on 2014. 

As someone who works in Marketing I have been bombarded with emails, display ads online, TV adverts, adverts in the newspapers and blog articles about how to make the most out of the event.

Like in America, 7 years ago...you can not escape it.

So who will do well?

Amazon are in a very strong place to offer discounted products with their technological capabilities and best in class distribution. Their partnership with Doddle is also a very good move for both the consumer and the companies. Amazon will have been planning this year's Black Friday for a long time and will have only selected items that yield a healthy profit.

Pure play online retailers such as Etsy, Not On The High Street, should also do well this year. A friend of mine who works at eBay has been preparing for Black Friday for months and was in the office before 6am today. Black Friday may be a welcome event for AO.com as they try to increase their profits after their recent expansion in Europe and an increase in marketing spend.

Again, in a similar approach to Amazon, they would have carefully selected the product lines and ensured they have the stock and means to distribute them in order to avoid losses and poor profit margins.

In terms of physical retail Mike Stewart, analyst at Panmure Gordon predicts that Dixon's Carphone will do well. He believes that their retail park locations (78% of their locations are in retail parks) and large market share enables them to collaborate with their suppliers and maintain a healthy margin.

Curry's PC World across GB (excluding NI) from LocalDataOnline

Mike also suggests that apparel retail will perform well as they take advantage of old stock and market it as Black Friday deals.

Who will not do so well?

Mike Stewart alluded to retailers such as Game Digital who may not fair that well this year. Of course their sales number will be impressive as parents hope to get a bargain before Christmas for their children. However this is not their target market and these consumers are unlikely to become repeat customers, leading to challenges down the line.

I personally also feel for the independent stores during Black Friday. Currently, across GB (excluding NI), 65% of all retail and leisure offerings are independents. As the larger brands cave into heavy discounting, consumers will expect this everywhere. This places a huge amount of pressure on the independent retailers who are in fear of losing out to their larger competition.

Leisure is the real winner of Black Friday

Many industry and news outlets discuss the effect of Black Friday on retailers. However little is mentioned about Leisure occupiers such as cinemas, restaurants, cafe's, bars and pubs.

With the increased footfall in town centres, retail parks and shopping centres, leisure occupiers are bound to reap the benefits. As I mentioned from my own experience in America - I was starving and needed to refuel in order to get me through the hustle and bustle of Black Friday.

For example, Fosse Park in Leicester has a number of leisure occupiers surrounding the retail offering including Pizza Hut Express, Costa, Greggs and McDonalds. For them, the large discounting by the retailers will draw in additional footfall which they can take advantage of.

Fosse Shopping Park and surrounding area (excluding NI) from LocalDataOnline

Another example, Westfield in London, has over 50 food and beverage outlets to support its 250 plus retail stores. Again, the increased footfall of Black Friday and the run up to Christmas will certainly boost their sales (and profits) before the end of the year.

Since 2010 the number of restaurants (excluding coffee shops, fast food takeaway, sandwich shops, fish & chip shops etc) has increased by +20% which is a net increase of 14,000 new restaurants across Great Britain. This growth, which is fuelled by private investment, brings its own challenges which Matthew Hopkinson wrote about here.

Nonetheless, Black Friday will certainly be a blessing in disguise for the Leisure industry.

In summary. It looks like Black Friday is here to stay. I have no doubt that this will be the biggest Black Friday the UK has seen so far. Those retailers smart enough to select items that offer a healthy margin and possess the ability to keep up with demand will do well. Unfortunately some retailers, especially the independents may see their profits fall during this period.

However, leisure occupiers should fair well and it will be interesting to see if any results about this are published in the news. We will certainly be tracking this over at LDC Knowledge.