In the run-up to this year’s Black Friday – and the wider end-of-year retail peak – leading UK delivery management software and commerce firms look at how retailers can put themselves in good stead to deliver for one of the busiest events on their calendar.
It has been a tough year for retail – supply chain disruptions, postal strikes, driver shortages and rising costs across all stages of business are just a few of the hurdles that retailers are having to overcome. Yet, customers’ demands remain high. They continue to expect quick and cheap delivery of their orders, the option to return unwanted goods easily and for free, all whilst demanding sustainable and eco-friendly practices from the retailer.
With retail footfall expected to be up 12.8% this year as shoppers capitalise on discounts, how will businesses find the right balance between expectations and reality and have a successful Black Friday that sets them up well for the Christmas period?
Daniel Hudson, director UK and Europe at FarEye
“Black Friday usually signals the start of virtual tills ringing as ‘peak’ is officially here. There’s a sense of excitement and relief that months of planning will finally pay off. But this year it is different. There is something seriously wrong when we have online flagship stores, like Made.com, going out of business.”
“Black Friday and Christmas shopping will not solve the problem of a looming recession, rising costs, energy and wage inflation, supply chain disruption and a skills shortage. In fact, managing these peaks causes added complications with increased demand and consumer expectations.
“Retail and the supply and logistics industries are in dire straits. In our recent survey, almost half of UK consumers said they would buy multiple products with the intention of returning many this year. The way people shop is changing and this is also driving up costs. Retailers need to take a critical look at their returns strategy to drive down costs in ways that do not impact the consumer.
“Organisations will be trying to smooth out their processes as much as possible to keep costs down whilst keeping up with the increased demand. Technology will play a key part in this by reducing turnaround times, ensuring delivery success, optimising carrier selection and providing much-needed visibility – there is a dire need to protect the revenue, which can only be done if we know where every penny is being spent.
“The retail sector is driven by loyalty – provide the right price and service and consumers will return. However, with interest rates rising and everyone having to tighten their belts, consumers will start to shop around to find the best prices. Loyalty is more important than ever – and more fickle than ever. It’s imperative that businesses provide the best service possible.”
Jamie Cairns, chief strategy officer at Fluent Commerce
“I think we’re going to see some great deals this Black Friday/Cyber Monday as retailers are sitting on much more inventory than they were last year. Many have stocked up on items that they were unable to get hold of last year due to the global pandemic, border closures and supply chain disruptions.
“We know that consumers are looking much earlier for deals this year as they have learnt to expect longer wait times for goods to be delivered. That puts additional pressure on retailers. One of the biggest challenges in retail is ‘overselling’ (taking an order that ultimately can’t be fulfilled) caused by inaccurate inventory availability data at the point of purchase. I’d expect to see this problem accentuated by higher sales volumes this year. Without visibility of inventory, across stores, online or in warehouses, retailers will leave the customer disappointed and potentially never to shop with the retailer again, it also leaves the retailer with a negative cost having spent money on acquiring that customer, online advertising spend, ecommerce platform fees, payment capture fees and the cost of managing the refund. All of this can be avoided.
“A good quality order management system (OMS) provides real-time inventory availability and can assist retailers with managing the chaos in a more profitable and efficient way and be the difference between ongoing brand loyalty and shoppers finding another vendor to satisfy their holiday needs.”
Alex James, CTO of Ascent
“For many retailers, both digital and physical, Black Friday, Cyber Monday, Christmas and January sales are the most important events that can make or break their year. Times have been unusually good for the last 13 years as the world recovered from the financial crisis of 2008. Despite its huge global impact, the pandemic has accelerated online sales for many companies – combined with governments printing money to keep consumers spending it seems like a perfect storm of conditions causing many digital retailers to have over-extended or grown a little chubby.
“However, this year feels a bit different, especially for online retailers. The recent collapse of Made.com might be a bit of a canary in a coal mine – once the darling of digital retail in the UK, its recent fall into bankruptcy is a stark reminder that although the future may well be digital, the journey is likely to be rocky and full of missteps.
“So, next year digital retail will need to look at strengthening the basics again, including scaling back on heady sales targets and budgets. The focus will shift to leveraging data, with organisations setting core KPIs around efficiency and unit costs, streamlined and clear user experience and targeted customer acquisition over blitz scaling. Running a smaller but more efficient and tighter digital channel might be the name of the game in 2023.”
Hugh Scantlebury, founder and CEO of Aqilla
“The Christmas adverts have dropped, people are putting up their lights and decorations, and many of us are looking forward to Christmas and new year celebrations as a chance to get together with family and friends for some much-needed fun and laughter.
“But with those gatherings often comes pressure to buy gifts. With Black Friday and Cyber Monday now part of the national psyche, it’s worth remembering that a bargain is only a bargain if you can afford it — and if you don’t put it on your credit card without the means to pay it off before the interest starts to build.
“From a business perspective, supply chains are under significant pressure from almost every direction right now. So, online shops and vendors need to ensure anticipated demand over the festive season is well served with a flexible and scalable IT infrastructure — and the supporting supply chain, order fulfilment, and accounting systems capable of meeting demand. Automating key processes at each stage is especially critical if businesses want to supply efficiently and effectively while reducing the incidence of human error and providing efficiencies and productivity improvements.”
Alexander Goncharuk, VP of Retail, Intellias
“Black Friday and Cyber Monday mark the start of the peak shopping period in the UK. The period when the retailer’s operations and digital platforms will undergo a trial by fire. For many organisations, this time of year is a live test of how well they have prepared for the load coming through the digital and in-store channels.
“Online shopping has surged recently, and ‘Cyber Week 2022’ might reach over $158bn in sales, bringing retailers opportunities and risks. However, all digital retail systems will be under stress during the holiday period, starting with offline and digital channels, inventory management, fulfilment, online payment services, cyber security, all the way through to the back office.
“The holiday’s change freeze period is becoming obsolete in retail and is a sign of an ageing technology stack with a high change risk and lack of DevOps capabilities. As a result, retailers must extend their focus from the digital channels to the back-office systems and replace legacy systems with speed because most issues impact retailer digital capabilities.
“Retailers who designed and developed their systems with scalability and the customer experience in mind will be looking to capitalise on this year’s coming holiday season. The winning formula is a scalable and cost-effective digital platform scaling on demand and permitting the product teams to respond to changing customer behaviour in real time. It might be a flexible pricing strategy, improved contextual search, and focus on the customer needs instead of one for all product hierarchy.”