Rather than invest in a one-off day of sales, Asda is betting £26m on what it calls “sustained savings” over the Christmas period in the hopes of making profitable sales.
The announcement confirms reports over the weekend that the supermarket would pare back its annual Black Friday (27 November) sales after it failed to deliver the projected profit last year. It was blighted by shopper chaos and negative publicity, with bargain hunters filmed battling for cheap TVs.
As a result, the retailer – which was one of the first to embrace the US-inspired discount day – is taking a different approach to boost food and drink sales this Christmas. From the beginning of November through to Christmas and the New Year, the retailer promises more offers in-store and online on a wide range of gifts including toys and gifts, Christmas food and drink and household basics.
“The decision to step away from Black Friday is not about the event itself,” said Asda president and chief executive Andy Clarke. “Over the last two years we’ve developed an organised, well-executed plan, but this year customers have told us loud and clear that they don’t want to be held hostage to a day or two of sales. With an ever changing retail landscape, now more than ever we must listen carefully to exactly what our shoppers want and be primed and ready to act the minute their needs change.
“When it comes to putting customers first, Asda has always led the way, which is why we’re just as confident in our decision to step away from Black Friday as we were in introducing it to the UK.”
The frenzy and mixed sales figures from last year have unnerved some retailers, and this is in line with a consumer survey by SAS, the analytics provider. Consumer tolerance for bargain hunting is limited to one-minute for each 1 per cent discount when waiting for a store to open. This ‘patience ratio’ drops to about 40 seconds for each per cent discount at the checkout.
Bryan Roberts, retail insights director at Kantar Retail, added: “Asda's move reflects British shoppers' desire for simplicity and clarity. Rather than limiting value to a limited period on non-essential items, the retailer's commitment to everyday low pricing on products that actually matter will be well received by shoppers who increasingly plan ahead for Christmas.”
Despite Asda's aim, some industry observers aren’t convinced it’s the right strategy; the argument being that even if retailers spread the load over a longer timeframe, all the consumer incentives in the world won’t count for much if their back-end systems aren’t optimised to deal with what will still be elevated traffic volumes.
“It’s a delicate balancing act for retailers; on the one hand, this approach spreads the workload and therefore reduces the risk of a system falling over,” argued Terry Hunter, vice president of ecommerce and client strategy at Astound Commerce.
“But on the other, it potentially risks losing the impact and enthusiasm for a sales phenomenon that’s characterised by a short timeframe and a flurry of consumer activity. Ultimately, I think Amazon is pursing the right sort of tact and it’s one that will become more prevalent in the market. But for most retailers, I think they’d see better returns if they ran promotions and discounts over no more than one or two weeks, rather than the best part of a month."
The thinking behind the move bares some similarity to Amazon, which rather than axe its own Black Friday sale has opted to encourage consumers to start the hunt early. It’s move is most likely aimed at taking some of the load off of its back-end systems, which will inevitably take a hammering when everybody jumps on the site looking for bargains in the same 24-hour window.
Asda will be hoping its own effort delivers a timely reprieve after it suffered one of the worse quarterly sales performances in its history in its most recent trading period. The supermarket is in the early stages of understanding how it can win over new customers, focusing on areas such as price, the in-store experience and convenience services like click and collect.