Friday, July 1, 2022
Commerce

Black Friday: There’s an elephant in the room

(c)iStock/Kikovic

Black Friday is a disaster — it termism at it’s worst, with little or no respect for the long-term harm to reputation and sustainability.

Stand back and look at it dispassionately, and it’s crazy that a hectic evening of knock down brawls and prices over flat screen TVs was seen as holding the key to tipping into gain.

Another strategy

Actually Black Friday is a sign that another strategy is needed.

But that’s the elephant in the room – than relying on flash sales and cutting costs, retail could find a way.

And let us be clear, we are not talking about transformation .

Shoppers spent #1.1bn on Black Friday at 2015. But, disperse that headline-grabbing #1.1bn over a year and it equates to just #21m a week. To put that figure in context, it amounts to a rise of just 0.3 percent on the business’s average weekly earnings (excluding the #1.1bn from Black Friday).

Are we really to think that retail cannot find a way to drive revenue increases of%?

Conversion failure

Given the relatively low levels of conversion right now, such a small gain is viable. Let’s remember that, in 2015 revenues of114bn represented a conversion rate of about 7 percent.

In fact, despite spending ecommerce advertising and merchandising technologies over time, conversion rates have stubbornly remained well below the 10% mark since ecommerce’s year dot – and – lag behind in-store prices.

That failure is down to the user experience and merchandising — ecommerce sites made it too hard to buy or have failed to inspire people to buy, or even both.

A rethink

The core issue is a reliance on techniques that do not work online — a rethink is required. At the moment, retailers rely on a manual approach to merchandising that is unsustainably labour intensive.

The Actual challenge now is to kick the customs of the past and look to another future

Retailers that are unsustainable in terms of resource demand — just look at the absolute number of internet merchandising jobs are attempting to fill.

And in terms of results — how long will retailers continue to attempt to prop up outcomes rather than address the core issues?

Automation and AI

The truth is this is the essence of a promotion (nicely, merchandising) technology issue. Retailers are failing to grasp a nettle that automation was tackled by other sectors.

But not just any automation. The automation of the heavy lifting of online merchandising — the variety of tasks that are vital although insistent which are nearly made for machines – and automation directed by artificial intelligence and information capabilities that are large.

This type of intelligent automation has two immediate virtues.

Chief amongst them is the capability to deliver more relevant experiences for each client, by adapting everything out of navigation and search to even merchandise display and recommendations according to individual behavior and intention in time.

That would be a moment: The second when retailers eventually embrace the potential of ecommerce — the ability to form and instantly adapt the customer experience and merchandise discovery according to the needs of every single customer and each.

Doing that across product exposure, search, recommendation and navigation of course takes care of both inspiration and ease of usage — the twin failings that have to date held conversion prices back.

Meanwhile, the merchandisers are freed in the spreadsheet, and enabled to focus on the high level jobs that actually need their pro input.

That could include implementation and the development of the holistic merchandise exposure plans that would be essential to guide merchandising. These high level plans could be formed by real merchandising priorities – company objectives like revenue, profit margin, stock oversupply and consumer trends (be they micro or macro).

Kick the habit

An operation that brings together technology and marketing to decrease costs, create efficiencies and enhance performance is precisely what retailers should have been doing all along when you think about it.

In their own defence, of course, the AI-enabled technology that truly enable it are only just emerging, so the real challenge now is to kick the customs of their past and look into a different future — a future where ecommerce experiences inspires purchase through absolute, individual significance.

Viewed through this lens, a sales gain of 0.3% unexpectedly feels much like a molehill compared to a mountain – and, thank goodness, which race to the bottom of that Black Friday is so emblematic would be a thing of the past.