Thinking

Flattening the curve: how to manage the peak in demand caused by Black Friday Sales

Black Friday this year will look rather different to previously, as retailers grapple with how to respond to reduced store capacity and the subsequent increased online demand.

Black Friday this year will look rather different to previously, as retailers grapple with how to respond to reduced store capacity and the subsequent increased online demand. Despite the economic uncertainty that COVID-19 has caused, it is estimated that Brits will still spend £7 billion and Americans $58 billion on Black Friday weekend. Clearly there are still gains to be made, and keeping customer experience (CX) at the forefront of this sales season will only increase these.

Managing store capacity

Due to health and safety concerns around queuing and crowded stores, retailers are being forced to reconsider how they operate stores over Black Friday and the sales period. Issues that need to be addressed include: limits on the number of customers in-store, queues at checkout tills and queues to enter the store (that could potentially reach outside in cold temperatures), organising the flow of customers in-store and how to present products in a layout that will entice customers to purchase multiple items. 

A few ways of addressing limited store capacity and potential for long queues include requiring customers to book appointments to enter stores in advance and using virtual queues; we’re already seeing some UK retailers experiment with the latter. Technology has the potential to help businesses navigate these challenges, however with limited time (and probably limited budget) these solutions may not be an option for many retailers. Instead, retailers can, and should, work with and empower front line operational staff to develop and execute procedures that work for their individual stores. Such engagement and co-operation will greatly improve the likelihood of success. 

One of the most obvious ways to combat limited store capacity is to encourage more people to shop online. However this also comes with its problems. COVID-19 has already accelerated the trend towards shopping online, resulting in increased pressure on retailers’ operations and delivery systems. One way to alleviate this is to repurpose sections of, or entire stores into ‘dark stores’, which transform these spaces into areas where only employees are allowed inside to pick and package items. Stores hold inventory and are located near the customer, helping reduce delivery times and the potential of stock outages. 

Stores can also be optimised for click and collect as demand for this delivery option has surged during COVID-19. To ensure this increase doesn’t negatively impact the in-store experience by increasing crowding and queuing times, retailers should create dedicated click and collect parking spaces and counters that are clearly signposted for customers. This will not only increase fulfilment capacity but also drive improvements in both online and store CX.

Managing online demand

After Black Friday 2019 Adobe Analytics Insights reported that online sales had hit a record $7.4 billion in the US, an increase of nearly 19% from 2018. This year, as customers look to avoid long queues and crowded places, online sales will only increase. Customers need to be able to access products online even during periods of heavy traffic, with a one second delay in loading decreasing customer satisfaction by about 16%, making website resilience critical to ensuring good CX. Having a poor experience may mean a website user not only might not become a repeat customer, but may not become a customer at all. Amazon discovered this on their 2018 Prime Day where website crashes lost them about $100 million in sales. Website resilience becomes even more important in light of the fact that periods of heavy traffic will not just occur over Black Friday this year. In the US, Target and Home Depot will offer Black Friday discounts from early November to decrease the sudden influx of in-store crowds on Black Friday, and by featuring new deals each week retailers can pull in consistently large numbers of website visitors. Some ways to improve website resilience are: getting a content delivery network (CDN), ensuring your server doesn’t have a data or bandwidth cap and running a load test via cloud testing. More advanced methods include creating an automatic scaling server (the number of servers used increases with the number of visitors) and having caching enabled where possible.

These peaks in demand also need to be managed from an operational and delivery standpoint to ensure that customers have visibility of stock levels and receive their orders on time. One way to do so is to increase delivery options like click and collect and curbside pickup. Macy’s view curbside pickup as their ‘big secret weapon’ for this Christmas season, despite only introducing this delivery option during the pandemic. This can be attributed to the fact that it (and click and collect) reduces logistics and retailer delivery costs, whilst simultaneously meeting the customer demand for reduced contact with other shoppers and faster delivery times. 

Operations teams can struggle during peaks in demand because automated warehouses are unable to cope with the dramatic increase in orders. This was experienced by grocery retailers during their surge in demand at the start of lockdown, and they managed it, in part, by hiring extra staff to supplement the work of automated machines. The same can be done by other retailers in anticipation of increased customer demand. Whilst not commercially sustainable in the long term, it would help retailers expand their order capacity and increase customer satisfaction, therefore enabling retailers to focus on sales growth over this period. 

Finally, smarter discounting is also key to improving customer experience and satisfaction. The focus for CX during holiday sales should be making it as simple as possible for the customer to purchase a product they like. Spamming customers with emails for products they have no interest increases frustration and distracts from making a purchase. Retailers should instead shift their focus onto targeting customers with specific deals based on their previous purchasing history, or highlight options for customers to provide preferences. 

The last quarter of the year is traditionally a pivotal time for retailers, helping to determine whether they will end the year in profit or loss, and this year will be no different. To ensure it is as successful as possible, retailers must ask themselves the following questions. Is the main goal to increase sales, improve customer loyalty, or maximise profit, and is there pressure to focus on the near or long-term aims? Do you understand your customer, how they shop and where the majority of sales will come from; in-store or online? Investment can then be prioritised to combat any challenges accordingly.

Taking all of the above into consideration, the following three points will be key:

  1. CX will be critical during busy periods to ensure the repeat custom retailers need to turn a profit.
  2. Customers will be shopping online more than ever before, making it fundamental that operations and delivery systems are integrated and are able to fulfil customer orders in a reasonable timeframe. 
  3. As customers are swamped with sale offers, it is innovation that will help retailers stand out. Sale items should be released in stages to keep enticing the customer back, and technology should be used wherever possible to reduce store queues and to make them exciting spaces to shop in. 

Across all of these points lies the fact that there will be increasing pressure on front line staff, and because of this employee experience should remain at the forefront of decision-making when implementing any changes.