Shopping bargain
The season of discounts and aggressive online sales are near - will this year's Black Friday be a blockbuster? Image Credit: stock image

The ‘Black Friday’ promotions have long since emerged as the biggest shopping event in the UAE retail calendar. We are seeing more retailers joining in, more categories and products listed, and more customers joining in.

More than 80 per cent of online shoppers will shop this Black Friday and two-thirds expect to spend more than what they spent during last year. This year is expected to see a robust 30 per cent growth - to put this in context, this is more than the staggering 100 per cent spike that was achieved last year as the Ramadan sales period earlier in the year was muted owing to supply chain disruptions.

Overall, this year’s Black Friday sales are likely be four times that in 2018. Black Friday was largely an online event pre-pandemic. The pandemic was a wake-up call to offline retailers to up their game and build a compelling digital presence. They used it to partner with e-tailers to dispose of excess inventory.

The common strategy was heavy discounts across categories, including in the ‘long-tail’ categories. Although sales grew, the scale of discounts provided last year will be difficult to sustain in the long term.

Furthermore, consumer expectation and behaviour has also changed. We have seen massive consumer adoption across retail categories on online channels. This means that consumers will move beyond electronics.

Widen the mix

Discounts, which has been a key driver, are no longer a sufficient condition to get sales. Consumers have also changed the way they discover products. For example, this year brand/retailer apps are the most preferred channel for product discovery. Finally, delivery times have become important, and consumers will expect these to get shorter.

Electronics has been the GMV (Gross Merchandise Value) driver for online retail for some time now, and this Black Friday season will sees a further spike in its contribution. This year though, while electronics will remain the top GMV driver accounting for 38 per cent of sales by value, while fashion, home and long-tail segments will see increased adoption.

The pandemic has created a strong dependency on online channels for consumers, and platforms were quick to scale up and effectively service their needs. This has instilled strong trust towards online channels, which is why shopping behaviour is not solely driven by discounts and campaigns anymore.

Have stocks ready

While the ‘right-to-play’ will still revolve around discounts, the ‘right-to-win’ will now depend on other aspects such as product variety, exclusivity, and service elements catering to consumer needs and addressing their pain points.

Retailers who address the top pain areas of consumers (products going out of stock, poor delivery experience and poor product descriptions) will see better adoption. The order volumes shoot up by three- to five times during the Black Friday period and retailers often find it hard to cope with this upsurge.

Product description however is an easy win that should be fixed, as it greatly aids consumers’ decisions. We recently did an event where we had senior executives from TikTok, Oracle and Kamal Osman Jamjoom to help understand what we should expect this Black Friday. Retailers should create differentiated strategies with a long-term view on profitability. Some strategies that we could see are:

  • E-tailers focussing on private labels to drive up margin realisation. Private labels will help control the customer experience in terms of stockouts and product quality/description while improving margins for retailers.
  • Omni-channel players focussing on developing their own apps. This is also aligned with consumer preference where retailers’ apps stand out as the most preferred discovery channel. It will enable them to control the end-to-end experience, foster direct consumer relations and get consumer feedback quicker.
  • Challengers focussing heavily on discounts. Black Friday is a period when consumers have been trained to discover products. It is a good time to acquire customers for challenger brands. However, these brands will have to ensure a good buying experience to retain customers in the post-sale period and realise long-term benefits.