Black Friday ‘bonkers’ for retailers

Wallets will be feeling a bit lighter this weekend as shoppers turn out in search of a bargain ahead of Christmas.

It's estimated that £10bn could be spent in the UK over the Black Friday period, £2.5bn in a single day.

There's something about the idea of Black Friday, like firing the starting gun on the festive season, that many shoppers seem to love.

But a handful of stores are keeping out of the fray, with one suggesting it is 'bonkers' to cut prices now.

The High Street fashion chain Fat Face won't be taking part for example.

"It's bad for customers, it's bad for business, it's bad for UK retail," says chief executive Anthony Thompson.

But is he right?

Some shoppers say they are weary of the custom, imported a few years ago from the United States.

There's the scrum to get to the best deals, the sales gimmicks, and guilt that you've spent more than you planned.

On top of that consumer group Which? has highlighted that many supposed deals may not be money-savers at all.

'Bonkers'

"What customers are looking for at Christmas is great value for money, not make-believe promotions and fake prices, and that's often what they get on Black Friday," says Mr Thompson.

But what about retailers? Doesn't it bring in business?

"For the High Street retailers it is bonkers," says Mr Thompson.

"All it's doing is moving sales from December into November. It's not growing the market and everyone is having to sell things at reduced margins."

"It really is bad for business."

Gamble

Harrod's boss too has said he thinks Black Friday "cheapens your brand".

But most retailers on- and offline will find it difficult not to join in.

They may be reluctant to forgo full-price sales in the busiest season of the year. But if they don't join the sales frenzy, they may lose out to rivals who do.

"I bet most retailers wish it was an American import that never arrived," said Steve Rowe, chief executive of Marks and Spencer, another brand that isn't offering Black Friday deals, though it does have some discounts running in store.

But discount supermarket Lidl is getting involved for the first time this year, whilst rival Asda announced Black Friday sales this week, after sitting it out in 2015 and 2016.

Moreover the intense competition has pushed retailers to start sales earlier and earlier, stretching back into October and to offer more and more items at a discount each year.

According to data collected from hundreds of stores by sales aggregating website Love the Sales, there was an unprecedented 43% increase in the volume of items on sale in October this year compared to last year.

That represents a big gamble. You have to order the stock in advance, but buy too little, and there won't be enough left to take advantage of last-minute shoppers paying full price around Christmas. Buy too much, and deeper discounting will be needed in Boxing Day and January sales to clear the shelves.

Early Christmas

For smaller online retailers, like the computer accessories firm Velocity Electronics, there's no question over whether to take part.

There is so much online traffic, it's about making the most of it while you can, says co-founder Eddie Latham. Last year the firm saw sales of £350,000 in a single day.

"Everyone builds up for this day and it's almost like Christmas has come early," he says.

But if shoppers focus spending on one weekend in late November, does that mean they will buy more overall?

Black Friday may simply change the timing of when we make our purchases, says Alan Clarke, chief UK economist at Scotia Bank: "Why spend now when I can wait for the sales?"

Others though argue Black Friday is helping to promote a new consumer culture during the build-up to Christmas, which will help boost retail sales.

"Anything that helps to encourage consumers to go shopping and supports the retail sector is a good thing," says Kien Tan, Director of Retail Strategy at consultancy firm PwC.

Original Article