8 December 2014

Some sense from John Timpson*

Why has Black Friday become such a phenomenon.  Surely this another name for a pre-Christmas sale, which will be at the expense of December sales at better margins?

You mustn't assume everything that comes from the US is good news.
Many retailers may live to regret big pre-Christmas turnover at low margins.  When I started learning our trade, a wise old retailer told me that price promotions are the lazy way to run a shop - the best shopkeepers build their reputation through a combination of quality, consistency, value and service.

It won't surprise you to discover that Black Friday failed to come to Timpson. We weren't tempted to open at midnight to resole the first 10 pairs of Church's shoes for £1, service Swiss watches at half price or even cut the price of key cutting.

In the 1960s the only shops that had a sale before Christmas were multiple tailors like John Collier.  Over 90% of their turnover came from made to measure suits with a ten-day delivery.  After 15 December they couldn't sell suits for Christmas so it made sense to start the sale.  The rest of us waited until January.

We all closed for three days over Christmas, then got ready for the sale starting on 1 January.  In the 1970s a few retailers, led by Woolworths, opened on 27 December to start their sale and gradually other shops did the same.

The Boxing Day sale was only introduced when shops were able to trade on a Bank Holiday.  Now retailers seem to be falling over themselves to cut prices well before Christmas.  They seem obsessed with the turnover figures - never mind the margin, and next year they will need to offer even bigger bargains to beat last year's turnover.

The winner is the crafty consumer,but not every bargain is what it seems.  Some retailers hold items at inflated prices in readiness for the big markdowns and buy in substandard merchandise to boost the stock available  for bargain hunters.  That cost with 70% off may have one sleeve much shorter than the other.

When the big retailers announce their like-for-like sales increases a few days after Christmas, it may be worth asking how much business has been done at a discount.

Now that Black Friday has crossed the Atlantic, retailers are stuck with it, price promotions are a disease that won't disappear.
It is very unlikely that shops will ever again enjoy the days when pre-Christmas demand brought record spending at full prices.



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