John Lewis boss Andy Street has warned fellow retailers to rein in Black Friday promotions next year after heavy demand over the promotional weekend caused havoc on the high street in the run-up to Christmas and hit profitability.
“It is not in the interests of retailers to continue to grow the pace of Black Friday at the expense of other weeks,” Street said, as he urged fashion stores and other retailers to “play it down” next year and leave the day focused on electrical goods.
Street said John Lewis’s “overall picture” on profitability in the five weeks to 27 December was similar to last year, as underlying sales rose 4.8%. Margins were affected by the concentration of electrical sales into the Black Friday weekend in late November but were helped by a late surge in clothing.
Electrical goods were most affected by the American-inspired bargain day on 28 November. Sales proved remarkably volatile, up 6.8% overall during the five weeks to 27 December, but down 14.7% in the last fortnight, compared with a huge 41% rise during Black Friday week.
In contrast, sales of fashion rose strongly in the last days before Christmas as Street said shoppers sought out knitwear, beauty and food gifts rather than tablet computers and phones in a last-minute rush. That pattern resulted in a 5.8% rise in fashion and beauty sales over the five weeks to 27 December, despite the impact of the warm autumn.
“Last year and 2012 were all about consumer technology, this year there was a more traditional spread of gifting,” said Street.
The late surge in fashion sales, which reflects a similar story at Next last week, is potentially good news for major retailers including Marks & Spencer and Debenhams which are set to report their Christmas trading figures in the next 10 days. Analysts have been concerned that fashion chains will suffer, having been forced to offer discounts to clear stocks of coats and jumpers during a balmy autumn.
Street said that he believed John Lewis had outpeformed 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. Sales in established stores fell by about 1% but Street said he would continue to open new outlets because a high street presence was important in supporting the growing online business. More than half of online orders, 56%, were collected in shops over Christmas.
John Lewis is set to open three new stores this year, but Street said it would invest more than £100m in IT this year for the first time, up from an annual spend of just £20m five years ago as it tries to keep up with changing consumer habits.
“It is all very well making sales on Black Friday but you have got to be able to deliver and fulfil them. Operationally things went well for us and we see that as a key competitive battleground and we were well set up to cope [with peaks in demand]. It was clear that some people were not.”
Both Marks & Spencer and Debenhams were among a group of retailers which struggled to cope with high demand on Black Friday. M&S was forced to delay orders and cancel its next-day deliveries to stores as its new hi-tech distribution centre in Castle Donington proved unable to process as many items as expected.
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