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The nightmare delivery cost of Black Friday

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So the Black Friday debates continues. Do customers love it or loathe? Do retailers do it because they feel it’s worthwhile or simply because they feel they have to?

Certainly, latest research from LCP Consulting suggests retailers have had their fill with the promotional event. Its research, The Future of Retail, suggests that the number of leading UK retailers who see Black Friday as an unprofitable and unsustainable promotion has doubled over the last 12 months. According to its figures it says the number has risen from almost a third (32%) last year to nearly two-thirds (61%) in 2016.

Managing Black Friday returns is one of the biggest challenges retailers face from the event. The LCP research, which saw the company interview more than 100 leading retailers in the US and UK, found that a third of retailers have been returns increase in the past 12 months with most saying that they see an increased proportion of returns following peak trading periods such as Black Friday.

Its figures suggest that five million purchases bought on Black Friday will be returned with London customers returning the most (up to 27% of purchases). This means that retailers will have to manage around an additional 50% of daily returns volume during the week immediately following Black Friday, when they will also be trying to cope with Christmas orders too.

Next day deliveries from Black Friday orders are also expected to increase, with a rise of 20% or one million additional parcels expected to arrive with the customer next day.

Click and collect is also expected to rise as customers look to pick up their goods from store but of the 3.5 million expected click and collect orders LCP Consulting expects only half to be collected the next day.

Stuart Higgins, retail partner at LCP Consulting, said that retailers had to carefully manage the promotional period if they do take part. The true profit impact of Black Friday is not driven by sales increases and gross margin; it is driven by the additional operating cost and the complexity of managing operational peaks. Managing picking and packing volumes is one thing, but you also need to have contingency in place to ensure delivery against service promises – no matter what the eventuality,” he said.

Higgins said retailers must also manage the processing of returns in a timely manner to credit the customer, and to get the merchandise back on sale to avoid the risk of having to mark down. “Fashion returns are even more important, as these can be as high as almost two thirds of orders,” he said.


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