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Asda’s Nightmare?

Asda, the Walmart owned retailer which introduced in-store Black Friday events to the UK, recently announced its decision to withdraw from the sales promotion day this year.   The retail giant stated that shoppers did ‘not want to be held to a day or two of sales’ and that its customers were tired of limited offers.  However, irrespective of whether shoppers are tired of flash sales or not, a significant proportion of them just can’t resist the lure of a good bargain – so will Asda have its own nightmare before Christmas?

 

It can be argued that the reasoning behind Asda’s decision to not take part is sound.  It’s focusing on its everyday low price heritage – a strategy that is key to Walmart’s operations.  It also won’t have to worry about the effort and expense involved with the one-off sale event.  But is Asda making a mistake?

 

Last year, an estimated £810m was splashed out on Black Friday in the UK – more than double the year before.  Asda sold 8,000 televisions within the first hour of opening.  A study from marketing agency Savvy (Oct 2015) revealed that 94% of UK shoppers are fully aware of the event, with 41% of shoppers planning to get involved with Black Friday to some extent this year.  After suffering the slowest October growth since 2008 (possibly because shoppers are holding back for Black Friday deals), retailers could definitely do with a boost to sales.

 

Many will assume that Asda’s stance this year is due to the near post-apocalyptic scenes in its shops up and down the country in previous years.   Who can forget the images of people fighting and arguing in the aisles?  Last year, a woman in Merseyside was taken to hospital after being assaulted in a queue outside an Asda store.  A man was arrested in Bristol after another fracas.  One shopper was quoted as saying: “It was bedlam, chaos. It was absolutely jam-packed. There was lots of screaming and shouting. I’m surprised there weren’t people on the floor. I found it disgusting. It was horrific.”

 

In light of this type of behaviour, there has been mounting pressure from various agencies to tone down Black Friday events.  This year, the National Police Chiefs’ Council advised shops to ensure they have enough staff and security to handle the demand for seasonal sales, including Black Friday.  Deputy Chief Constable Sue Fish said, “I urge retail companies and their store managers to ensure that they have sufficient security arrangements.  Shops should consider longer periods for sales than just a day.”  The leader of Usdaw, which represents shop and retail workers, has also appealed to consumers to exercise calm after reports of ‘worryingly high’ levels of violence and abuse in 2014.

 

It’s worth pointing out that parent company Walmart is continuing the Black Friday tradition in its American stores with its ‘Dare To Compare’ campaign, which pledges to track prices published by retailers such as Amazon, Best Buy and Home Depot throughout Friday, and revise its own deals accordingly every hour.  Its website also contains a store map for each of its outlets, clearly showing where each department is located, in order to ‘find gifts faster’ and encourages customers to ‘plan ahead’ by scrolling through the offers which will be available on Friday.  There is clearly no desire on the part of Walmart to scale-down activity outside the UK.

 

Compare this with Asda which, at time of going to press, had made no mention of any sale activity whatsoever on its website, with the exception of a toy promotion.  And at a time when the latest figures from Kantar Worldpanel showed Asda has been overtaken by Sainsbury’s as the UK’s number 2 supermarket by market share.  With Lidl and Aldi chipping away at its position in the grocery market, it could be argued that Asda really needs something to shout about.

 

Interestingly, the view of management within some retailers is that they have no choice but to participate: “[John Lewis] are part of this whether we want to be or not,” said commercial director Paula Nickolds.  The company’s ‘Never Knowingly Undersold’ strapline means they have to compete, but that doesn’t mean that they think concentrating so much effort on a single day is a good idea;   Managing Director Andy Street said “My personal hope is that this is the high water mark for Black Friday. I don’t think we can put the genie back in the bottle, but do we need to stoke that fire anymore? I personally hope not.”

 

So, will Asda’s management live to regret this decision?  Trying to distance themselves from the scenes of in-store near rioting is one thing, but to completely avoid Black Friday seems overly drastic.  Online retailers are getting stronger and stronger each year, but are dependent on an efficient and streamlined logistical structure in times of increased demand – is Asda too scared to put all its eggs in the online basket?  Asda played an instrumental part in creating this ‘monster’ and with or without its involvement, the big discount day appears to be here to stay. What’s the betting that we see a U-turn on this decision next year?

 

Laura Finnemore / Senior Research Executive

 

 

 

 

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