But as more commerce moves online, retailers need to be aware of cyber-attacks - despite the US$86bn cost in attacks annually only 46% are prepared.
The name Black Friday was coined by Philadelphia police officers to describe the chaotic scenes in the city the day after Thanksgiving 50 years ago. But given its rising importance to the consumer products industry – and to retailers in particular – Golden Friday might be the more appropriate term.
Black Friday typically involves ‘bricks and mortar’ retailers offering huge discounts to lure brave customers into their stores to wrestle cut-price microwaves and television sets from their fellow shoppers’ hands. According to the National Retail Federation (NRF) consumers are already ticking off items on their holiday shopping lists, and Thanksgiving is no longer the start of the shopping season. In fact, holiday shopping is beginning earlier than ever before with deals and promotions already driving online traffic increases over last year. However, the rise of our digital economy plus scenes of mayhem and sometimes violence has driven many people online. Retail ecommerce was estimated at US$1.4 trillion in 2014, or 5.9% of the total - a figure expected to rise to 8.8% by 2018. Sales on Cyber Monday (the first day back in the office following Thanksgiving in the US) are now expected to surpass Boxing Day (26 December) this year.
For retailers the rewards could be huge: Amazon sold 64 items per second on Black Friday in 2014. It remains principally a US concept but, like so much of US culture, is slowly spreading to other parts of the world. Around 5.1m Canadians crossed the border in 2014 to take advantage of discount deals while their counterparts in the UK spent an estimated US$1.3bn in 24 hours.
In the UK some retailers, such as ASDA and Argos, are taking a different approach to seasonal discounts. Both have decided to move away from a single day of sales and instead spread their reductions over the winter season, with Argos offering sales every Friday leading up to Christmas. While it remains unclear which strategy will bring in the biggest revenue, retailers around the world are using all the tricks in the book to increase sales during the holiday season.
But with fierce competition and online customers less loyal to any particular store than those who visit in person, retailers need to make sure their digital presence is up to scratch. A slick interface and ease of payment are important but so too is security. Cyber-crime is on the rise: Grant Thornton research suggests its direct impact is now costing companies more than US$300 billion a year globally. Sony and Talk Talk are just two of a raft of companies which have lost customer data to hackers.
Cyber-attacks cost money
One in eight retail businesses faced a cyber-attack over the past 12 months according to data from Grant Thornton's International Business Report. These attacks resulted in an estimated revenue loss of 0.39% which sounds small, but in monetary terms is a very significant US$86.8 billion.[1] Despite this, fewer than half of retail businesses have a cyber-strategy in place (46%) which is below the global average (52%) for all businesses.
These estimates of direct financial impact do not include the long-term reputational damage and loss of trust that companies suffer when their systems are breached. If an online customer worries that their credit card details are not securely stored by a particular company, they will almost certainly choose to shop somewhere else. Very few retailers are lucky enough to offer a product so unique that customers cannot find a substitute.
There is plenty of advice out there for the businesses who realise that they cannot afford a major hack – either financially or in terms of brand capital. Those that don’t might find the golden lining to Black Friday suddenly darkens.
Jennifer Neill is a senior manager in the retail practice at Grant Thornton US
[1] Based on global retail sales estimate of US$22.492 trillion – eMarketer, December 2014
