Member Article

Black Friday: Bad for Business?

Black Friday, the first Friday following Thanksgiving, has long been considered as the starting pistol of the Christmas shopping season for US consumers – and it seems that along with Rock ‘n’ Roll, Halloween parties and bubble-gum, this trend has now been well and truly adopted by UK shoppers.

With an estimated £810m spent over the last Black Friday weekend in the UK, you’d be forgiven for thinking that retailers would be rubbing their hands in glee. However, some businesses were less than pleased, with Andy Street, the managing director of John Lewis, considering whether it was right to “concentrate trade so much in that one period”. Street went on to claim that as Black Friday put so much strain on a retailer’s back-end operations – including online and deliveries – the shopping phenomenon was something of a challenge for profitability.

Indeed, this year John Lewis will be joined by Asda and Argos among other retailers as some of the major high street stores scale back plans for Black Friday.

However, it’s unlikely that demand from customers will be diminished. And just as 2014 saw numerous high profile businesses - including Tesco, GAME and Best Buy –experience website crashes and prolonged outages, we can expect that consumer traffic will increase during this period.

The genie is well and truly out of the bottle. Retailers will need to ensure their business model can cope with the sales peaks created by seasonal demand.

Staying in Control

Managing sales spikes has long been an issue for all manner of businesses, not simply retailers. Planning is essential, and businesses need to keep a close eye on how even minor discounts can significantly impact sales levels and profit margins.

Traditionally, business planning was top-down due to the complexity involved, but today’s decisions have to be made closer to the customer, to provide as much agility as possible. As the vast majority of businesses have access to them, spreadsheets have become a readily available tool that can be used across a number of departments or functions. And while they may be the weapon of choice for many smaller companies, it’s important to remember that they were never designed for that job: they were designed to be a personal-productivity tool!

Using the Right Tools

Instead of spreadsheets, some businesses have resorted to building complex custom analytics tools. In many cases years are spent fine-tuning these applications, eventually to the detriment of the business as the initial developer of the complex codes has probably left the company long ago.

Legacy tools used for personal productivity certainly have also lost their appeal and purpose; they will never be powerful enough for true enterprise analytics in complex environments. And when a growing proportion of your technology infrastructure is moving to the cloud, wouldn’t it make sense to shift the building blocks of your business – the myriad of spreadsheets - there too?

The software as a service environment puts the planning capabilities in the cloud, making it easy for an entire team or department to be involved in collaborating on the best approach, whilst sharing accountability for the results as they are realised. The on-demand resources of the cloud provide retailers with unprecedented scale and ability to cost-effectively manage and process data volumes that were previously unthinkable. The unlimited resources of the cloud are ideal for highly sophisticated, configurable and up-to-date forecasting which utilises all kinds of structured and unstructured data.

Re-forecasting tomorrow based on today’s results, pivoting the business based on changing environments, and having the tools you’ve built automatically change with you is paramount in maintaining a competitive advantage in today’s business landscape. With peaks in trading around special events unlikely to fade at any point, it’s essential for businesses to be prepared – and there’s no excuse not to with the tools available.

This was posted in Bdaily's Members' News section by Ian Stone .