The online shopping revolution reached a peak over the Black Friday weekend. Instead of pounding the pavements and queuing in the cold, British shoppers browsed for bargains online. With phenomenal retail records being broken, it is a signal that retailers need to step up their digital transformation plans to ensure the customer online shopping experience is up to scratch, that customer expectations are being met and to secure long-term customer loyalty.
Online sales on Black Friday hit £1.1 billion, up 36 per cent on last year, according to data from Experian, making it the biggest day of online shopping ever and the first time the £1 billion mark has been reached. It is clear that British shopping habits have changed but the appetite to spend has not. Amazon, the world’s biggest online retailer, declared it sold more than 7.4 million items on Black Friday in the UK, an increase from 5.5 million in 2014. However, overall the there is no guarantee that this will deliver a calendar Q4 uplift in sales. Rather, Black Friday has contributed to front-loading sales that traditionally would have taken place across December. This is good for businesses as it provides an early revenue boost ahead of paying Q1 2016 quarterly rent. However, it places significant strain on supply lines and stock control as they try and meet this significant single peak in Q4 demand.
On the surface, it seems that many UK retailers coped far better with surging online transaction demand compared with previous year. This is a reflection of the growing investment, focus and weighting that digital is receiving within these organisations. However, not everyone was successful online in 2015. As more issues around poor fulfilment of online orders and crashing websites comes to light, it is clear there are still lessons for retailers to quickly embrace ahead of Christmas.
Taking the customer journey online
Retailers plan the customer journey in-store in painstaking detail, doing everything from developing eye-level point-of-sale to using computational fluid dynamics to understand customer flow through the aisles at peak times. Equal attention must be given to improving the customer experience online. Every single element of customer data must be collected and correlated to better understand online shopping habits, preferences and expectations. Many retailers successfully changed their service promises to ease pressure on deliveries this year, correctly seeing that shoppers were more interested in deals than same day, empty delivery promises.
The unprecedented online surge of shoppers over Black Friday weekend resulted in websites from some of retail’s biggest names intermittently collapsing under the strain of consumer demand. Serious investment is still needed to boost server capacity and improve the operation of websites, as well as integration with stock control and just-in-time ordering systems. This will ensure a joined-up sales and inventory process that serves customer expectation and does not leave a retailer saddled with stock the customer base does not want.
Ultimately, customer loyalty is up for grabs over the festive season. If a retailer successfully anticipates the digital needs and expectations of the online consumer, they will enter 2016 in a profitable and stronger position than rivals with a weaker and less-integrated digital approach.
Capturing customer loyalty over Christmas and beyond
Despite the logistical headache of staging a pre-Christmas sales spree, online retailers have benefited hugely. Black Friday and Cyber Monday provide retailers with a high-profile window to capture the attention and loyalty of existing shoppers and those that have not shopped with them before. This is the best time of the year for retailers to roll out loyalty schemes as a value-add to entice new customers. Giveaways and promotions then actually cause an uplift in future sales. It is not enough for retailers to boost sales over a weekend, awareness of their offering must be stretched out over Christmas and beyond in order to deliver real value to the bottom line.
The debate continues amongst high street retailers whether there is lasting commercial value in Black Friday and other one-day discounting sprees and whether digital transformation should be encompassing investment to support such demand peaks. Big name retailers like Next and Asda ignored it all together. There is certainly a case that Black Friday encourages shoppers to spend earlier in the festive season, but not necessarily more. One thing is for sure, if retailers wish to capitalise on the shopping migration online they must improve the functionality of their websites, be prepared for returns and find innovative ways of attracting custom for the long-term.
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