That’s part of the Christmas shopping season, “Black Friday” has become a key date for retailers. It is an opportunity for businesses to focus customer behaviour on one particular day, build excitement around the retail experience and to promote attention-grabbing discounts to attract shoppers.
Has the pandemic made a difference? And will the rising cost of living impact this year’s sales? Swoop sat down with Rhys Cunnah, Head of Unsecured and Asset Finance at Swoop to find out what SMEs should do to take advantage of the biggest day in the retail calendar.
Swoop: What’s going to happen on Black Friday? Are we expecting chaos on the high street or will there be further migration to online shopping?
This year, we are expecting to see an increase in online shopping. There will also be more activity on the High Street – this is great for businesses that have survived the last 12/24 months of Covid.
I have a feeling that momentum around Black Friday events has only grown: they seem to become a bigger story each year, and we may expect to see retailers promoting their most impressive discounts early.
Swoop: What do SMEs need to do now to make sure they are ready for Black Friday?
There is no “one size fits all approach” here: if you are running a business, you will know what the trends in your own industry are.
What I would say is that planning ahead is always good: ensure that you have adequate stock ready and that your cash flow situation is strong.
Flow really is absolutely essential: you need to have funds in place to fulfil orders and meet demand.
This is where acting sooner rather than later is essential: if you needed to borrow to cover your back, where would you go? Bear in mind that interest rates may be going up, so now is a good time to put your borrowing plans in place.
Swoop: Brexit, supply chains and recession – how will this affect Christmas this year?
Increase in the cost of living is going to have a direct impact on the disposable income of many families. I will many wood seek to borrow to cover the cost of Christmas through short-term facilities such as credit cards, there may be less appetite to do that.
On the other hand, credit card interest is already high: if customers feel that it is not going to get any higher, they may well be prepared to use the plastic.
There are a couple of factors affecting stock: supply chain still seems to have a backlog from COVID-19. And Brexit is still an ongoing problem: more red tape and higher taxes could mean higher prices.
If you are importing goods to the UK from Europe, you may also have to contend with timings not being as promised and rising fuel costs affecting costs to you as a business owner.
Business owners have to make a difficult choice about whether they pass the costs on to customers, absorb them into a narrowing margin or upsell to improve their bottom line.
Swoop: If businesses stock up for Christmas will they have a full warehouse come January?
Again, much depends on the demand and the individual products.
January sales are a fixture of the calendar which reflects that there has always been a tendency for businesses to over-order stock.
Swoop: How can SMEs hedge their bets for an unpredictable future?
The most important thing is cashflow. Is absolutely essential for any business to remain concerned. Do you want to meet your customers demands, you need to pay the wages and you need to keep the lights on. No cash flow, no business, it’s a simple as that.
I would also advocate planning what to do in a worst-case scenario: Its customer stairway, if you can’t get stuck on the shelves, if you can’t pay the electricity bill – if all that happens on Black Friday, what will you wish you had put in place today?
I think it’s really important to get the support of your fellow SMEs. Cash flow is a problem for everyone, so find out how your peers are managing and figure out what you can do for yourself.
Swoop: How is spending behaviour changing?
Business is moving online. It’s strange that a concept like Black Friday, which is based around brick and mortar retail businesses, should have migrated onto the Internet, but there it is. If you do not have an online presence, a basic website with straightforward functionality is worth the investment. Better something than nothing.
Another big change is that many companies are using the parties to spread credit for personal use. These are facilities for consumers that often have an ultra short repayment period over weeks rather than months or years. And if you do not have the ability to offer such a facility to your customers now, consider whether this will encourage more action at the tills.
Finally, habits are changing: with less disposable income, less is being spent on every day luxuries. The big question is whether this will continue into Christmas, or whether people will see black Friday as that one opportunity to grab the credit card and live for the moment.
I have a feeling that there will be more help made available to cover the rising cost of energy for consumers, if not businesses.
This may prompt more spending than the current gloomy economic outlook would suggest.
Do you have concerns over cash flow? Can you see yourself struggling to get stock on the shelves? Are there gaps in your funding in the run-up to Christmas? Check your options at Swoop – you’ll find the best deals in the market and support to help you grow. Click here.