Category Archives: Retail

Xmas John Lewis’ sales tumbled and Black Friday is to be blamed!

07 Wednesday Jan 2015

Posted by in Digital Transformation, Retail

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We are now starting to get more data of the real impact of the Black Friday retail frenzy.

On the 10 December 2014, I wrote an article about delivery issues that some of the largest retailers faced as a result of Black Friday craziness. I was also interrogative on the real impact on the bottom line Black Friday will have on the entire peak trading period.

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John Lewis confirmed to the BBC that Black Friday was “more challenging profitability-wise”.

According to the Guardian, John Lewis saw sales fall back 1.4% in Christmas week as sales of electrical goods were pulled forward by the Black Friday promotional weekend.

Furthermore, John Lewis said to the BBC that “online purchases were behind a rise in Christmas sales, despite shop purchases falling over the festive period and like-for-like sales were up 4.8% in the five weeks to December 27 – as store sales dropped around 1%”.

John Lewis boss added “Black Friday is a blessing in the sky as we can achieve record sales online and that our customers can have confidence in the delivery”.

Andy Street made a direct comment on its competitors who weren’t able to deliver as a result of the massive surge in sales:

“it is quite challenging for the rest of the industry as it is pushing all this trading in one day”.    The proportion of sales taken online during one day compared to the entire festive period is a new thing in the UK and the “dependence on fulfillment”.

M Street do not think that the retailers “can put the genie back in the bottle”, however he hopes that next Black Friday won’t be bigger.

Street declared in the Guardian that he believed “John Lewis had outperformed rivals because of its investment in IT and delivery facilities, which meant it was able to meet online orders without any hitches during peak periods, including Black Friday”.

Well done to their Online team, analysts and architects who were able to get the investments and capacity solutions correctly sized and approved. This is pretty impressive when one day web visits were up 300% YoY.

It fair to say that Black Friday ‘effect’ is not as productive as retailers expected. Basically, it sounds that they are selling similar volumes but at a discounted price, hence impacting their profitability.

We are now waiting for Christmas sales data from John Lewis competitors.

Taking orders is great but how about delivering on time and on quality?

10 Wednesday Dec 2014

Posted by in Digital Transformation, Retail, Risk management

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In my last post I wrote about the issues that some of the large retailers had, in order to cope with the online demand on Black Friday. I also questioned the ability of the same retailers to deliver on time.

It was reported that M&S was Hit By Pre-Christmas Online Delivery Delays and that  “share price has fallen 3% as investors fear overall sales will be affected”.

Unfortunately, M&S aren’t an isolated case, as written by Zoe Wood in the Guardian, Christmas shopping surge puts retailers under strain online. In this article, we learn that Tesco Direct, Debenhams, and many other retailers are trying to clear the backlog of orders whilst impacting the delivery date of new orders.

Taking in consideration the entire commerce chain, including delivering on the retailer’s commitments:

Should the retailers be taking orders when they can’t deliver one time ?

A purchase isn’t just made of the item sold. Especially when everyone can compare online. The product is made of the online experience, the quality of the communication during the sale process until and after delivery, the delivery itself (timing, product condition, item missing) and the after sale services such as customer services and guarantee (for example John Lewis offers free extension guarantees).

Should the retailers adapt their online stock levels to their actual capacity to deliver on time and on quality? Or the other way around, should they adapt their delivery capacity to meet the demand? In other words, does it make sense to sell 100 items when they know that they can deliver only 50 on time and on quality?. Customers get frustrated.

The question is, would you accept as a customer to be informed during the online shopping process that your items can’t be delivered in store on time, potentially too late for xmas? Or is it an accepted inconvenience that the rebate offsets?

They are  number of lessons to be learnt from the Black Friday and Cyber Monday sales.  In particular, the operating costs incurred in order to minimise the delivery delays, coupled with the reduced margin and the impact on the delivery chain during the following days and weeks.

Overall, £810m was spent online just on Black Friday. It will be interesting  to know the total amount spent online until Christmas, hence the real impact on the bottom line for the entire peak trading period.