Chris Blackhurst: Why retail has to control the Black Friday monster

5 January 2015

To say that Andy Street is not your typical retailer is an understatement.

Oxford-educated, with a degree in philosophy, politics and economics, he oozes intellectual confidence and loves a good argument. He talks ferociously quickly, churning out clever ideas and thoughts.

Part of the reason as well that he can be so bold is that he runs John Lewis, and his employee-owned department store chain is quite unlike any other. Street wants the industry to scale back Black Friday. His worry is that the US phenomenon of heavy discounting on the last Friday in November is now skewing the UK Christmas, and the retailing year.

His own John Lewis saw sales for that week surge 22% higher than the same week last year and gave it the highest weekly sale in its 150-year history. Sales were up 5.8% year on year in the five weeks to 27 December. When new stores are excluded, sales rose 4.8%. Total sales in Christmas week were flat. In the five weeks, sales of electrical goods were up 6.8%, but actually fell 14.7% in the final fortnight. This, versus a 41% increase in electrical sales in Black Friday week.

Street has called for fashion stores and other retailers to play down Black Friday, and to leave the day focused on electrical goods. The industry, it is true, struggled to cope with the frantic demand, with internet and delivery systems crashing (John Lewis enjoyed a 300% boost in online traffic on the day).

But that is not his real concern; his own group dealt well with the havoc. No, his main anxiety is that Black Friday will erode Christmas profitability, that purchases made during Black Friday week would have been made anyway, and at a higher price.

There’s not much he can do about electricals, where Black Friday in the UK is already virtually institutionalised. However, if he can stop it spreading to other items he will. And he should.

The tell-tale signal was that John Lewis margins were harmed by Black Friday promotions in electrical products, but in the end, held up, thanks to customers continuing to buy undiscounted clothes and other items. Include fashion and other ranges in the Black Friday bonanza, and there go the profits at the most vital time of the year.

Will Amazon and Asda, the two US-owned giants that imported Black Friday, heed Street’s strictures? No. Will UK retailers, anxious to compete with Amazon and Asda, do as he says? Unlikely.

But Street is correct. In embracing Black Friday, UK retailing is hugging a monster, one that, if it’s not careful, will eat at profits across the entire piece.

If they’ve got any sense they will at least confine the day to electrical goods. While that is bad enough, encouraging Black Friday to grow beyond electricals promises to be far, far worse.

Chris Blackhurst: Why retail has to control the Black Friday monster

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