newsCO.com.au –British retailers cool on “Black Friday”, the American sales bonanza

November 17, 2017

@newsCOflash

2017-11-16 15:58:43

JUST as Christmas seems to come earlier each year, so it is with Black Friday, the post-Thanksgiving frenzy of discounts and fisticuffs in the aisles. This year it falls on November 24th. But that didn’t stop Argos, a big catalogue retailer, from launching its own two-week Black Friday season of “amazing” prices on November 15th. Amazon, an online giant, kicks off on November 17th. Currys, an electrical-goods shop, is already discounting its vacuum cleaners. And anyone who misses Black Friday can always catch up on “Cyber Monday”, three days later.

Black Friday was introduced to Britain only in 2010, by Amazon. Since then it has come to challenge Christmas as the most hallowed marketing pretext of the year (see chart). In 2016 Britons spent a record £5.8bn ($7.6bn) between Black Friday and Cyber Monday, 15% more than in the same period the previous year. Argos recorded its biggest-ever day of sales. John Lewis, a chain of department stores, had the biggest week for sales in its august 153-year history.

Despite the momentum that the event has built up, retailers are approaching this year’s jamboree with caution. For a start, shoppers seem unwilling to open their wallets. Sales in October were 0.3% lower than last year, according to official figures. One high-street tracker, BDO, recorded its worst October for a decade; the British Retail Consortium, a lobby group, recorded a 1% drop in like-for-like sales compared with the previous year. Clothes sales, in particular, were hit by an unseasonably warm month.

Falling real wages, the slowdown in growth and the threat of more interest-rate rises have all dented consumer spending—especially discretionary spending, which is what Black Friday is all about. Springboard, a retail analyst, predicts a drop of 0.6% in the number of people turning out this year.

Some retailers were already cooling on the new tradition. Discounts may help to pull in customers, but as margins are squeezed—for instance, by the rising cost of imports caused by the fall in the pound—the prospect of giving things away on the cheap becomes less alluring. “I wish we could send it back where it came from,” says Sophie Michael of BDO.

Shops such as John Lewis, which boasts that it is “never knowingly undersold”, cannot avoid taking part. Aldi, a German supermarket chain, is cutting some prices this year, having previously claimed that its products were discounted every day already. But some stores have been reining in the giveaways. Asda, a supermarket owned by Walmart that, along with Amazon, helped to create the Black Friday craze in Britain, has scaled back its participation; analysts are watching what it does this year.

Those companies that go along with Black Friday will be doing more to differentiate themselves from the competition. One strategy is to abandon the “flash sales” of the past and instead apply discounts early and consistently, as Argos and Currys are doing. Another is to include new products to draw in new customers: expect more health and beauty items to be discounted this year, as well as the usual electricals. Others will be targeting their discounts more precisely at very expensive goods, like big-screen TVs. Let the mayhem begin.

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