UK shoppers are set to squeeze more of their Christmas spend into the Black Friday period due to expectations of heavy discounts, but this will lead to an increased strain on retailer profitability. Spend on promotional sales will rise 2.2% to £4.3bn, compared to a rise of just 0.6% for non-food retail over the whole of Q4, says GlobalData, a leading data and analytics company.
Zoe Mills, Retail Analyst at GlobalData, says: “Black Friday promotional sales continue to outperform the overall quarter as shoppers both delay spend that would have otherwise occurred before the event, while other shoppers bring forward spend, for example to capitalise on the low prices when purchasing Christmas gifts.
“However, its influence is waning as growth is forecast to be 2.2% versus 3.5% in 2018. We are also seeing an increasing number of retailers discount ahead of the promotional event, often depicting these sales as a pre-Black Friday promotion.
“While this may ease the demand on logistics operations over the period, it will mean that shoppers demand ever steeper discounts during Black Friday as they expect something more from retailers during this time.”
Black Friday falling later in the month also has an impact on spend over the period. In previous years, Black Friday weekend, which is typically the busiest period of the event (now often spread across at least a week), has fallen before the majority of UK consumers have been paid. In 2019, it will fall on payday weekend ensuring consumers have more money (at the right time) to spend on the event.
Fashion & beauty is set to remain the best performing sector during the Black Friday period, forecast to grow by 2.7%. However, this will be driven predominantly by the health & beauty sector while many clothing & footwear retailers are heavily discounting ahead of the promotional period.
Mills adds: “While unlikely to have a substantial impact on this area’s performance over the Black Friday period, the prominence of sustainability concerns in 2019 will see some consumers and retailers alike shun the event. Deciem will be shutting its stores on Friday 29 November and French brand Fagou is supporting a Make Friday Green Again collective to limit what it says is a discount period that encourages consumers to purchase items they do not need.
“Its impact will be small in 2019, but as we have seen throughout the year as more consumers – and as a result, retailers – place greater emphasis on environmental concerns, shopping habits may begin to change in the future.”
The electricals sector makes up almost 30% of Black Friday promotional spend, however, but as the most mature category in this market, its growth potential is limited. Forecast to grow 1.7% in 2019 versus 3.3% in 2018, it will be difficult for electricals specialists in particular to achieve the same level of growth as last year.
Mills concludes: “Last year saw heavy discounting on new releases, such as the Amazon Echo Dot (3rd generation), and while there are some updates to devices, a lack of newness will mean that fewer consumers have reason to purchase compared to last year.”
Black Friday period is defined as promotional sales during Monday 25 November – 2 December 2019 inclusive, is forecast to grow by 2.2% versus 2018 (Monday 19 November – 26 November 2018 inclusive)