black friday webinar with the store

THE STORE -WPP FAST TRACK BRIEFING SERIES

A Very British Black Friday

TUESDAY, OCTOBER 4, 201611.00 EDT – 11.30 – EDT

THE STORE -WPP FAST TRACK BRIEFING SERIES

A Very British Black Friday

Introduction

Gwen MorrisonCEO, The Store - WPP

The Store WPP’s Global Retail Practice

The Store Global Conferences

IMMERSIVE BRAND EXPERIENCES& THE ASPIRATIONAL SHOPPER

MAY 5 & 6 2016EDEN ROC RESORT MIAMI

WPPGLOBALRETAILFORUM

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Today’s Session

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Highly Commended: PR Operation Impact

Aaron ShieldsStrategy Director EMEA

Alasdair LennoxExec. Creative Director EMEA

Agenda for today

1. Shopper behaviour

2. The business case

3. Defining the future

4. Post BF 2015 observations

5. BF 2016 predictions

6. Q&A

NB. This is a point-of-view on the British retail landscape. It was written a year ago, prior to BF November 2015

*With insights from the USA, China and Singapore*

Version 1

Why is FITCHinterested in Black Friday?

We are fascinated in the evolution of shopper behavior.

We are interested in how this American phenomenon exports and evolves in different cultures, as we have x14 offices worldwide.

Designing the future.

Storm in a tea cup

Here is the reality:

The majority of shoppers in Britain embarking upon Black Friday will be in their dressing gown, holding a cup of tea.

No queues, no hassle and no stress.

A Retail Week poll of shoppers who made a purchase on Black Friday 2014 revealed that 58% did so via a computer at home, 29% used a mobile device and opted for home delivery.

Scaremongering stories of shopperswrestling in the aisles and police being called serve only to remind the great British shopper of what they should do their best to avoid.

Storm in a tea cup

The truth is, Black Friday is a positive experience for shoppers.

The same poll also showed that96% of shoppers who bought on Black Friday were either very orquite satisfied.

Not exactly shopping pandemonium.

Storm in a tea cup

34% of Black Friday shoppers visited a physical store last year.

So what is it that drives these individuals to take on the much-hyped Retail Armageddon?

To get under the skin of people and understand how and why people shop, we need to understand their shopping mindstates.

Dreaming, Exploring and Locating

Fear of missing out

We know that 75% of Black Friday shoppers start the day with a strategy.

They have already been dreaming and exploring online and they know what they want and they have located it. Now it is time to buy it.

For the majority this is online but, as we know, one-third of shoppers still go to a store.

The keenest queue up in the cold, waiting for the doors to open; for the rest it’s the battle to get there before stocks run dry.

Fear of missing out

Fear of missing out

This behavior is FOMO, the fear of missing out.

This acronym was coined a couple of years ago to describe a psychological disorder caused by the onward march of

technology, but its use is certainly appropriate for bargain shopping within a time-limit.

#FOMO

Black Friday originates from the USmajor lifestyle event

Now that many retailers open up onThanksgiving Day, the appeal of Black Friday as a day for deals appears to be waning. However, the appeal of spending the day with family and good friends is alive and well, from families in matching outfits to special breakfasts and sleepovers the night before.

It is more about tradition than transactions over there.

Not for everyone

Homegrown online retailer Alibabahas been making billions since 2009by turning an unofficial holidaycalled Singles’ Day into the biggestonline shopping day of the year.

As Alibaba eyes international expansion, we could see yet another discount day being added to our calendars.

Not for everyone

Amazon started offering Black Friday discounts in the UK in 2010

Prime Day is a one-day-only global shopping event exclusively for Prime members.

So, Black Friday is a fabricated discount day in the UK and certainly no holiday unless the Queen decrees it.

Not for everyone

“It is not in the industry’s interest tocontinue to grow the pace of Black Friday at the expense of other weeks…

You want more steady trade and obviously you want more of it at full price…”

JOHN LEWIS CEOAndy Street

Black Friday steals Christmas Sales

Black Friday sales are predicted to reach £1 billion in the UK this year, up from £810 million in 2014.

So surely it must be good news for retailers?

Actually no.

Black Friday discounts drive shoppers to spend earlier rather than to spend more.


“Black Friday in the UK is pointless…

It seems to have arrived online andalthough we did not run promotionslast year, we saw a lot of people on high streets... But all it seemed to do was bring forward sales, so the week of Black Friday was good and the following week was bad and if you average them together sales were fine…”

PRIMARK CEOGeorge Weston


There was a sharp drop-off in demand in the following weeks. Like-for-like sales grew just 0.1%, compared with the estimated 2% in the 18 weeks to 3 January.

As a direct result of Black Friday discounting, Argos missed its sales forecasts and recorded reduced profits.

Homebase sales for the 2014 Christmas period were up only 0.6%, despite heavy Black Friday promotion. Its shares fell 7% at this news.


Marks & Spencer clothing and homeware sales were down 5.8%12 in the Christmas period of 2014, and there were similar stories amongst the supermarkets:

Marks & Spencer (ex)CEO Marc Bolland blamed Black Friday discounting for much of the drop in sales.


Heavy discounting, unpleasant retailexperiences, disappointment, late fulfillment and high returns are a perfect storm for erosion of brand equity.

Black Friday 2014, Curry’s PC Worldexperienced web traffic that increased fivefold from 2013.

At midday, customers queued forup to an hour, listening to the message,

“We’re really sorry that the huge demand for our deals means you’re having to wait.”

Erosion of brand equity

At Tesco, deals went live at midnight but the website was down for several hours.

For M&S, delivery times had to double.

Oasis’s Black Friday 2014 resulted in a 50% return rate from all orders.

So the commercial case is weak for retailers, the experience can be poor for shoppers and brand equity is likely to be eroded.

Surely there must be a backlash?

Erosion of brand equity

Yes, there are signs of a potential backlash.

The most interesting example is from America, where REI outdoor stores are shutting their doors and giving staff the time off.

They recognize the importance of keeping staff happy in creating long-term sustainable advantage.

The Backlash

Defining the future…

We predict The British Black Friday willbecome purely the territory of retail discounters.

It will turn into yet another cut price period in the run-up to Christmas.

Black Friday online will grow and spread.

Last year, Cyber Monday appeared and this year, it looks as if some online retailers are extending Black Friday even further into weeks.

Black Friday will become the domain of discounts

The long-term winners will be the brands that can offer a fluid and rewarding experience online and in-store.

Success will require increased access to information online, together with a gratifying and unique

physical experience in-store.

It also requires a major shift in mindset: no longer are retailers selling, but they are helping people buy.

Winning retailers will offer a continuous experience

More than £3 billion was spent Over Black Friday weekend in the UK.

Black Friday was the UK’s biggest Day for online retail ever.

Cyber Monday boosted online traffic by 60 per cent…

Amazon claims 2015 Black Friday was its biggest sales day in the UK ever.

CityAM Black Friday UK Sales Report

Post BF 2015 Observations

However…

At least 15 retailers’ websites couldn't cope.

John Lewis site went down around 3.20pm on 27 November, and according to one estimate, the

company might have lost some £2.8m due to this.

Argos site slowed down and its page load time exceeded 10 seconds, when compared to 0.5 seconds page load time for Amazon.

Post BF 2015 Observations

A continuation of our 2015 predictions

What will the BREXIT uncertainty affect spending?

The evolution of omnichannel

2016 Predictions

and here is your FITCH shopping guide for this years Black Friday…enjoy!

Discussion & Questions

Thank YouGWEN MORRISON

CEO, The Americas & [email protected]

@gmorrison5 @thestorewpp

ALASDAIR LENNOXExecutive Creative Director, EMEA

[email protected]@isawthismorning

AARON SHIELDSStrategy Director, EMEA

[email protected]