Black Friday may have started as an American tradition, but now it is has established itself as a shopper’s holiday north of the border. What challenges does it represent for Canadian retailers?
SAS Institute surveyed 3,458 consumers in the U.S., Canada, the U.K., Australia and New Zealand to find their holiday retail plans. While Americans still lead the charge to the mall, Canadians are gaining. Almost a quarter (22 per cent) said that they are likely to shop on Black Friday.
E-commerce is playing an important part in modern holiday shopping cycles, with 17 per cent of Canadians saying that they will hit online stores on Cyber Monday.
The extra transaction load will hit IT departments hard, said Shawn Smith, retail solutions specialist for SAS Canada. In retail IT circles, this weekend now represents what is deemed in IT circles as a ‘surge event.’
“One of the main challenges IT departments can face around Black Friday is an increase in traffic that leads to significant stress on a variety of IT systems and processes,” he said. “These can affect systems that support everything from merchandising to transaction processing.”
The increase in transaction volume can lead to some unexpected problems, including issues with fraud detection. “Some retailers also find that the management and enforcement of sales audit and loss prevention activities are more challenging, due to the sheer volume of transaction processing both in store and online over the holidays,” he warned.
Several retailers in Canada declined to comment on their Black Friday preparation plans, but the ultimate goal is to create a solid end-user experience with minimal delay, integrated seamlessly across in-store and ecommerce experiences, said Larry Fretz. gaming and hospitality practice lead at London, Ontario-based tech advisory firm Info-Tech Research Group. This can equate to longer hours and increased hours for IT departments.
Security challenges
Retailers will be coping with extra challenges, such as integration with third party payment processors, and avoiding single points of failure. They will continue to grapple with security, warned Fretz, who highlighted the POS as an ongoing point of attack.
This may be a particular issue for U.S. retailers, whom are grappling with the chip-based EMV technology that has been installed in Canada for years. Enthusiasm for this technology is low in the U,S,, even following an Oct. 1 deadline, in which liability for fraud shifted to the retailer from the payment processor.
There are some things that retailers should be doing to prepare for the post-Thanksgiving weekend rush, Fretz suggested.
“While most organizations test staging/development environments, retailers must find a convenient time (ie: early morning) and stress test all the services that comprise the production environment end to end sufficiently in advance,” he said.
This will give the retailer time to purchase additional IT resources and adjust the architecture, but he also warns against making changes too close to the wire. Most sensible retailers impose a blackout period at least a couple of weeks before a ‘surge event’ to avoid any last minute changes downing their systems.
Learning from retail
“Look to historical surge and baseline data to size and test your systems – if not available or in doubt, test to failure,” continued Fretz. This should also form part of a broader ongoing capacity management plan that allows for base surges in transaction volume.
Third party services are also a critical part of this capacity planning process, and retailers should negotiate with them to be sure that they’re able to handle the processing volume, Fretz warned.
IT must also include and communicate with the broader organization well in advance of the surge event, he said, ensuring that the correct messaging is provided, so that retail staff know what to do, should IT departments crack under the strain.
These tips apply across most sectors, not just retail. CIOs in different industries can learn a lot from the challenging facing Canadian retailers during surge events, said Smith.
“Using an external monitoring tool to keep a close eye on website performance before, during, and after an event will allow organizations to catch performance issues early and immediately deploy a contingency plan,” he said.