Black Friday - who wins?

As the Black Friday to Cyber Monday discount weekend comes to a close, Belake Research Ltd tries to decipher whether it was all worth it. 

Black Friday is a relatively new phenomenon in the UK, widely thought to have been brought over from the US by the Amazon and the Asda/Walmart group. It's been a feature of the US retail sector since the 1960s but in recent years has been gaining popularity in the UK as hard pressed shoppers want to make their pounds work harder.

But who are the real winners in the rush for the bargains? The retailers clearly would have us believe that the consumer is the winner, and the crowds queuing from the small hours of Friday morning would probably agree. However the more sceptical argue that the hype encourages consumers to buy items they would not otherwise have done, and that retailers' price cuts are not always what they first appear to be.

So who's right? Belake Research set ourselves the task of shedding some light on this question.  We wanted to find out if consumers really needed to rush out on Friday morning.

Let's start with some headline stats. According to the BBC, Visa was expecting some £581 million spent on Black Friday online alone, which would make it the biggest Internet shopping day in history. There were over 3000 deals offered by major retailers with an average price cut of 40%. This certainly suggests that the consumer can grab a bargain.

And grab they did. Asda alone sold 8000 TVs in the first hour of trading. Figures from the Guardian suggest that expectations were surpassed, with some £810 million spent on Black Friday and eclipsing the £650 million spent on Cyber Monday - traditionally the day when the most online sales occur in the run up to Christmas. In the first 6 hours of Monday 267,370 online orders were logged, compared to 404,835 on Friday. Clearly the sales were good for retailers.

However, the hype may not last forever. Some reports show that interest in Black Friday is waning in the US with 5.2% fewer shoppers venturing out than last year, and spending down 7% in store, although 26% more was spent online. But overall for November sales are up 15%, although the most interesting increase is that sales are up 32% on Thanksgiving itself, suggesting that retailers are having to extend the Black Friday phenomenon to maintain its momentum. This serves as a warning to UK retailers. If you continue down the discount route, your only destination is to cut deeper or longer. Amazon appears to be heading towards this already, starting their deals as early as the Monday before Black Friday. So the longer term impact of Black Friday might start to hit retailers' profits.

Consumers need to keep their heads. Some choice quotes were obtained by a Guardian reporter. “I got a Dyson but I don’t even know if I want it. I just picked it up,” showing that some consumers are spending in a way that isn't considered and making the assumption that everything is a bargain. Another quote shows an alarming trust in the retailer that they are actually getting a bargain. “I got two coffee makers, two tablets, two TVs and a stereo,” he said. “I couldn’t tell you the prices, but I know they’re bargains." Anecdotally then, some consumers are at risk of thinking they have a good deal, when in reality they don't.

Possibly consumers know what they're letting themselves in for. 92% of Guardian voters rate Black Friday as 'shopping hell'. 

However whether shoppers actually got a good deal across their whole shopping basket last weekend is yet to be determined. Both Which? And Kantar suggest around 40% of items in supermarkets are on offer at any one time, year round. This equates to 12,000 products lines across a reasonable sized superstore, which would typically carry between 25,000 and 35,000 separate product lines. Multiplied across a large national chain with a few hundred stores, and more than one of each product line in stock, and all the claims by major retailers about the number of products that had been discounted this weekend began to feel rather weak, despite being impressive on the face of it. As such it feels like some retailers are discounting fewer products albeit to a greater degree, and may be duping consumers into a retail frenzy. The consumer ends up buying more products at full price to offset the loss on the advertised bargain. Indeed, BBC Breakfast reported on Black Friday that 5 out of 6 items bought that day were full price. So a careful discounting strategy gives the retailer an upper hand.

Finding no clear answers in the headline stats we decided that we needed our own research. We took 20 of the most widely promoted bargains and tried to identify whether they were good deals or not. For each we found the lowest price of a close or exact match product in stock from any retailer on Tuesday after Cyber Monday. 

Across our basket of 20 black friday deals, the total discount was just 4.9% when compared to other deals that could be found after the weekend. So with some savvy shopping, consumers can get close to the deals offered on Black Friday four days after the event.

Black Friday ChartHowever, the figure is affected by one big ticket item where we found a significantly cheaper alternative, so here’s the detail. Only 7 items out of 20 were at least 20% cheaper on Black Friday than an equivalent product was after the event, and 5 of these were TVs. 8 had up to a 20% discount and for the remaining 5, we found either the same or better deals after the event.

However, neither is it wise to base your purchasing decision on the level of discount claimed by the retailer. In all but one case, the alternative was cheaper than the pre-Black Friday price claimed by the retailer.

So what’s our conclusion? Based on this limited sample, there are some genuine deals to be had on the Black Friday weekend, which are difficult to find after the event. But this is not always the case, and half the time the discount is only 10% cheaper than a close alternative found after the event, which may affect your decision to brave the crowds. A savvy shopper could bag a bargain, but you need to do your research beforehand. Only buy specific items that you intend to – if you buy blind, you may actually spend more than you need to. But the actual stock of these specific items is limited, meaning that in a crowd your chances will be limited too to bag that item.

This gives the consumer the best chance of winning on Black Friday. It's probable that retailers just about win too, given the level of card spending, but they'll find it increasingly difficult to keep winning as the years go on.

Some notes on methodology. The search was done via the internet, allowing us to cover more ground in just 24 hours of price checking, which was done after business hours on Monday and during Tuesday (1st & 2nd December). In our analysis, we searched for items which a consumer might reasonably accept as an alternative. For 12 out of 20 items this was a direct like-for-like comparison, where we believed a consumer would only want an item of the same make or model. But for the other 8 items, we felt that a consumer might reasonably be satisfied with a close alternative. For example, if someone is in the market for a cheap TV, they would probably be happy with a similar TV of same or greater size, of similar quality. In addition, some discounting may still be going so we intend to revisit this analysis in the future, to see if we can spot some genuine deals.