Will Consumers
Ever Pay the Full
Price Again?
The month leading up to Christmas is a busy time for retailers in the UK and for any
consumers who were seeking out bargains, there was a plethora of sales events for
them to choose from.
The first and biggest of these was ‘Black Friday’a term coined in the early 2000s in America to
refer to the Friday after Thanksgiving. It is regarded
as the start of the Christmas shopping period
and a time for retailers to offer promotional
sales. One of the first Black Friday events
occurred in the UK in 2003 when the UK
retailer Currys lowered the prices of a number of
electrical items. Since then, many major retailers
have followed suit and embraced this American
practice. In 2014, more retailers than ever
joined in with the Black Friday marketing scheme,
offering large price discounts on products to
entice early Christmas shoppers. It is estimated
that on Black Friday in 2014, there was
£360,000 spent every minute in the UK on
credit cards and 8.5 million online transactions
during the day. The online retailer Amazon, who
introduced Black Friday to their marketing strategy
in 2010, recorded orders during this year’s
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event for more than 5.5 million goods, with
approximately 64 items being sold per second
on the website. Tesco stores sold more than 8,
000 televisions in their first hour of trading and
had sold out of the Microsoft Xbox 360
consoles an hour later.
For retailers, sales events such as this are a
great way of getting rid of old stock in order
to make way for new arrivals. However, some
retailers came under severe criticism of their
handling of the day. Websites, including Tesco
Direct and Argos, found that the increased traffic
on their websites with savvy consumers trying to
get the best prices for their product, meant the
websites crashed or customers were faced with
up to an hour long wait in a virtual queue. Police
were also called to a number of stores to deal
with incidents of customers assaulting each
other to get their hands on the best deals, with
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Will Consumers
Ever Pay the Full
Price Again?
continued
the Police being required in some stores to
assist with the sheer volume of people ready
to enter stores as they opened with customers
making sure they were able to get the best
bargains.
As firms strive to become more competitive,
some stores are starting to lower their prices
even earlier, providing deals to their customers
on the Thursday evening before Black Friday, a
time which is becoming widely known as ‘Grey
Thursday’. John Lewis, who offered deals from
midnight on Thursday, reported that their website
sales were up 307% compared to Black Friday
in 2013, and this year, their fastest selling item
was the Apple iPad mini, while a food processor
was selling at a rate of one every 30 seconds!
The main issue surrounding sales events such
as Black Friday, is that of consumer expectations.
The market is becoming accustomed to prices
being reduced on these days – End of Season
Sales, Bank Holiday Sales, Boxing Day Sales
and the like. As such, many customers are now
holding off from making these large purchases
until the time of the next big sale. Some experts
are now calling this the ‘DFS effect’ – a term to
highlight the fact that some retailers have too
many sales and discount offers. This will make
it very difficult for retailers to gain full price for
many items when the buyers know they can get
them at a lower price later. Does that mean that
all expensive items will only be bought during a
sale in order to get it for the lowest price
possible? No. But it will deter some customers
from making a purchase until they feel they are
getting ‘the best deal’ and firms need to make
sure that any budgets that are created take into
account the sudden surge in spending that can
happen as a result of these key times of the
year. There may be a temptation for firms to
acknowledge this and inflate their prices at ‘non
sale’ periods in order to make price cuts look
even more appealing, but by doing this, they risk
losing customers altogether to competitors.
In 2015, Black Friday falls on Friday 27
November. That gives consumers plenty of time
to start saving- if they have any money left by
that time, after the Boxing Day Sales, New Year
Sales, Easter Sales and Bank Holiday Sales!
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