Black Friday

Black Friday will happen at around the time this report is published. But it is worth just putting the latest news into perspective.

Asda standing apart

Asda announced that it was going to stand apart from Black Friday. It seems that the decision was taken soon after the event last year. It cleared impacted on margins and was hugely disruptive. Black Friday had been very successful in the first year but when everyone else joined in last year the combination of discounting and damaged food sales impacted on trading performance.

It seems that Asda has not even been buying special merchandise for this year’s event. So why did it not announce its decision earlier? The most likely explanation is that it decided that it would rather see its competitors lose money over it, than let them off the hook early.


It is not clear how much other retailers will be able to change their plans at this late stage. There will still be the special purchase merchandise to clear, but there will not be the same need for other discounting. Tesco has already said that it will not open till 5.00am instead of at midnight as it had originally planned.

The others

Everyone will probably breathe a sigh of relief. Amazon may still do Black Friday, but stores can will no doubt think carefully about their plans for next year.


We reckon that Black Friday added about £400m to retail sales last year, about 1.7% of sales in November.  So if Black Friday is much the same as last year, then sales in November should be around the underlying trend rate of about 2%.  The message from most retailers after last year was that the strategy would be one of damage limitation, to put this in perspective, if there were to be no Black Friday at all, we'd be looking to retail sales growth of between 0 and 0.5%.  Given that most retailers have been planning for Black Friday through the year we think that retail sales growth is likely to be around 1.5%.  But the smaller Black Friday is, the more spending will be available for full price sales in December and that makes us much more confident about our forecast of 2.5% growth in retail sales in December.


It has been a busy month for the supermarkets - results for three of the Big 4, and M&S plus Kantar data indicating further progress in the hard discounters. All this just at the time when Mintel is about to publish its annual survey of the supermarket sector.

Third quarter results

Sainsbury’s emerges as easily the best performer of the big four and Asda is the worst. There’s an encouraging improvement from Morrisons and even more so from Tesco (for a quarter which ended about a month earlier than the rest).

Figure 1: Leading food retailers: Latest quarter, like-for-like sales growth, excluding fuel, November 2015
M&S Food 0.2
Sainsbury's -0.1
Tesco -1.0
Morrisons -2.6
Asda* -4.5

Kantar data

The Kantar data for the 12 weeks to 8th November (ie about a month later than any of the results shown above), show Sainsbury’s increasing sales and overtaking Asda.

Aldi and Lidl continue to grow strongly and their combined market share is now 10%.

What is going on? – short term

The winners in the short term major on value for money. M&S and Waitrose (not illustrated) at one end of the spectrum and Aldi and Lidl supposedly at the other, have in common that they offer great value for money, with clear straightforward pricing. It is, perhaps, significant that the worst performer is the company that claims to be cheapest and focuses all of its marketing effort on promoting that position.

The others are also moving to EDLP, but they are still stuck in a programme of aggressive high-low promotional activity.

Longer term

All these issues are discussed at greater length in the forthcoming report on Supermarkets – UK, November 2015.

We know that the superstores are losing market share and convenience stores are gaining.

We know that Aldi and Lidl are growing fast.

The question is – why? And we suggest the following reasons:

  1. Aldi and Lidl are growing because they have moved their proposition closer to the middle ground of food retailing widening their ranges, boosting their fresh and premium offer without seriously adding to their cost base.

  2. There are socio-economic changes taking place, mainly the shift in population back into inner cities, which are fundamentally changing the way we shop.

And note that Aldi and Lidl are just as much convenience retailers as they are in competition with the superstores. The fact that they are gaining from both sides is an important factor in their progress.

Where next?

The reasons for the current trends add up to saying that they will continue. There is no prospect of them reversing in the short term. The superstores will continue to lose market share and all of them recognise the need to reconfigure their offers for these new conditions.

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