Black Friday to see single-day UK slowdown but wider 'seasonal' sales will rise
Black Friday store visits will drop this year for the first time since it became a key shopping day back in 2013, a new prediction says. But another forecast says that spending over the Black Friday period will rise above inflation.
Both predictions sum up just how hard it is to call whether UK retail will be strong or weak this Christmas season.
Retail intelligence specialist Springboard forecast footfall on November 24 across UK high Streets, retail parks and shopping centres to dip 0.6% year-on-year, but whether this is a sign of further UK economic weakness of simply a reflection of Black Friday becoming more online-focused is open to debate.
Springboard itself has blamed “the increasing constraints on household budgets from rising inflation and the recent interest rate rise.”
However, it’s undeniable that Black Friday having migrated online in recent years is a factor in footfall numbers. Stores that faced unexpected demand in 2014 pull out all the stops in 2015 but many found visitor traffic to their physical locations was low while their websites crashed due to high demand and that pattern has continued.
But we can’t ignore the fact that the economic environment will also weigh on shopping this season. Springboard thinks UK Retail Parks will see a slight increase in footfall for Black Friday compared to its high street and shopping centre counterparts, increasing by 0.1%. But high streets should be down 1% and malls down 0.5% to make up that total predicted drop of 0.6%.
However, there will be plenty of pent-up demand on Black Friday and with shopping having been slow in recent weeks, Springboard said retailers are optimistic that footfall will increase 18% on Black Friday compared to the previous Friday.
NOT JUST A DAY
Whether Black Friday shopping rises or falls this year, another factor we have to take into account is the widening out of this shopping event from ‘one day only’ to a four-day (or longer) period.
Analysts at Globaldata said Monday that shoppers are set to spend £10.1bn from Friday November 24 to Monday November 27. That’s 3.8% higher than a year ago and will make up 10.4% of total Q4 spend.
GlobalData said a lower proportion of Black Friday spend will fall on the day. When first exported from the US to the UK the event promised impressive discounts for one day only. However, over time it has been extended, both to encourage more consumers to participate but also to relieve operational pressures.
In 2016, most retailers advertised their Black Friday deals as Friday-though-Monday, but Amazon’s event ran for 12 days it has already said its sale will run for at least 10 days this year. This could be another reason for Springboard’s forecast of slower footfall one the Friday itself.
GlobalData expects more retailers to extend their promotional calendars to include the whole week before Black Friday in an attempt to stimulate demand as they continue to struggle this quarter. And unwilling rivals could be forced to participate to remain competitive. This is particularly difficult for retailers that price-match, such as John Lewis, which will have no choice but to bring down prices early, hurting margins and stock levels.
Although the 3.8% growth GlobalData is predicting is slower than previous years, more retailers are expected to take part this time to try to make up for some of the sales they’ve lost in what has been a weak autumn season so far.
Analyst Eleanor Parr said that while electricals have traditionally been the main focus of the event, over the past two years fashion retailers such as Asos and Topshop have improved their Black Friday offers, driving spend in this market. Furthermore, health & beauty performed well in 2016, with department stores such as House of Fraser, Selfridges and John Lewis offering strong discounts on branded fragrances and cosmetics. Strong growth is expected in this sector in 2017 if these deals are replicated.
But the researcher also said that rising inflation means retailers will struggle to offer the low prices seen in 2016. Margins have been hit as suppliers have been forced to raise prices due to increased production costs and retailers have been forced to increase prices in an attempt to mitigate margin loss.
Increased cost prices will mean retailers are unable to offer the level of discounts advertised in 2016, meaning demand may waver as consumers feel less inclined to make bargain purchases on impulse. As a result, retailers will need to be creative with how they advertise Black Friday promotions this year.
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