27th November signals the return of Black Friday. It was first introduced by Amazon to the UK in 2010, and then to physical stores by Asda in 2013; this year it is predicted to be our biggest ever. Building on “bargain passion” and “brawl-mart” from last year, what does 2015 have in store for us? Here we explore where retailers can focus their final preparations, as well as how to make the most of the post-event forensics that follow.
Black Friday 2015
Black Friday approaches creating a fair amount of trepidation for most retailers and customers. 2014 saw site crashes, queues to get on sites, and late deliveries; success was mixed from ‘Black Friday boom’ to the sluggish sales that followed. However, it’s here to stay, at least for the moment.
Forecasts show potential for the first UK £1bn online shopping day, and Yodel predicts that 76% of UK shoppers will buy over half of their Christmas shopping online this year. This is truly staggering given just how fast the market has taken off. How will retailers cope with this mega peak in demand?
Focus should be on three key areas for retailers right now: people, logistics and customer expectations.
Your people: without them you’re dead in the water
When preparing for peak, people planning and management is crucial. ‘Multi-skilled team members’ at the ready mean individuals can be moved to areas where they are most needed at any given time. With high demand, warehouse and distribution centres become high-pressure environments, ensuring teams are recognised for their effort is critical to reducing loss of valuable employees. However, extra temporary team members can ease the pressure only if they are in place and properly trained ahead of peak.
Your logistics: are you as prepared as you can be?
Retailers such as John Lewis, Tesco and Sainsbury’s have invested large sums of money in opening new warehouse facilities and automation over the past few years. Furthermore, using third party logistics providers to prepare items (pre-packing etc.) can save time as when demand rises. Early and ongoing communication of likely volumes to parcel carriers is essential, as well as ensuring promotional products are in the right place (i.e. DC or store, certainly not in containers!).
Your customers’ expectations: are you going to disappoint them?
Retailers, such as Amazon.com and Walmart in the US, are now offering deals under the Black Friday umbrella over extended periods to spread the pressure off the one day. Smart. Another solution is to manage customer delivery dates by increasing the average expected delivery date. Most customers won’t mind as most value certainty over speedy delivery.
Overall, it’s crucial that the realities of the operation are given their fair share of voice; listen to your operators. Operations are not built for peak (if they are, those retailers have far too much CapEx going spare!), so the adoption of different norms and expectations is needed, along with clear communications both internally and to the customer.
So, what can I do right now?
If you’re reading this and thinking it’s too late, Black Friday isn’t far off; think again. It’s never too late. Ask yourself a few simple questions, answer honestly, and fix if needed:
Know your limits and bottlenecks
- Your supply network has a capacity; know what it is and when it’s close
- Your customer; everything done, is done for them...is that so?
Plan what action you need to take if limits are close
- Can you turn off new orders coming in to the site or particular location?
- Can you divert to different locations, is the labour in place to cope if so?
- Are you using your partners as much as possible? Promote other services such as Collect+, ByBox, etc. to spread volumes across channels
Refresh your disaster recovery procedures
- If your supply network creaks and breaks, what is your next best action?
Without trying to tempt fate, snow-gate isn’t explored here; the assumption being that learnings from a few years back are well and truly embedded into standard operating procedures now...
Forensic examinations post-Black Friday
Now it’s all about final preparations, but very soon it will shift to post-Black Friday reviews and forensics. Whilst this will hopefully be a jubilant affair, with much congratulations and back slapping, there will also be a fair share of retrospective “if only we’d known/ done/ planned...[insert at will]” types of questions asked. Either way, it’s the right time to ensure valuable learnings and hindsight feed directly into budgeting and planning for next year.
The key question during the forensics phase is simple – how can you better flex the supply network to cope with mega peaks without injecting disproportionate investment?
- Are channels linked so that demand in one can be serviced by another? If not, do you need to move faster towards an omnichannel strategy?
- Can orders move between channels? Can delivery dates be altered? Can stock be forward promised with later delivery dates? If not, consider Strategic Order Orchestration
- Whilst DC/ FC automation generally requires significant capital investment, speed to flex large manual fulfilment operations at peak is difficult, particularly without errors
Retailers continually come under pressure at this time of year as they face Black Friday followed by Cyber Monday and in-store peak later in December. They need to ride these waves of peak demand, whilst recovering after each and preparing for the next. However, these peaks shouldn’t come as any surprise; yet the press will no doubt be full of bad news stories again where customers have been failed in 2015 by some of the largest retailers.
Results will be mixed, however, with the ever more-savvy customer out there, be prepared for even greater peaks as they are driven into promotion-frenzied buying. Who, just who, is brave enough to abstain from Black Friday this year? If there is such a retailer, will they be the true winners?
This article was co-authored by Ian Hughes:
Ian is a Senior Consultant and experienced retail project manager. His depth of expertise within logistics and supply chain is derived from having run significant operations and programmes in retail for over 20 years.
Connect with Ian via his LinkedIn