Business

Is Black Friday just a ruse to benefit big US retailers?

Cantillon: Price promotions displacing Christmas purchases to earlier point in year

Galleria Mall in White Plains, New York: Sales promotions such as Black Friday and Cyber Monday have caught on in Ireland. Photograph: David Dee Delgado/New York Times

Tue Jan 9 2018 - 10:48

Adopting “Black Friday” and “Cyber Monday” may prove something of a pyrrhic victory for retailers here. These US promotional events appear to be displacing consumer spending to an earlier point in the Christmas shopping calendar without generating any additional spending.

Figures from the Central Statistics Office (CSO), published last week, show there was an overall increase of 2.6 per cent in the volume of retail sales in November when compared with the previous month, driven in the main by a jump in sales of electrical goods.

While the official stats for December have yet to be published, various retailing bodies – Retail Excellence Ireland and Retail Ireland included – suggest sales here were broadly flat or "on a par" with 2016, which is surprising given the rebound in employment.

Perhaps more worryingly, the migration of consumers online, where price competition is more fierce, is forcing retailers into a greater level of discounting, a shift that ultimately favours the big beasts of the sector like Amazon.

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Deeper discounting

Davy Stockbrokers said November’s volume increase “came at the expense of deeper discounting”, noting retail price deflation in November accelerated to -2.8 per cent from -2.3 per cent in October.

While these global trends have remained somewhat hidden in the Irish sector, which has been in recovery mode since the crash, they are more obvious in the UK, where the spike in November spending is usually offset by weaker December sales.

The latest UK Visa Consumer Spending Index, published on Monday, signalled an even steeper fall-off in household spending in December. Though much of this will be put down to the squeeze on real incomes as a result of Brexit, the decline might also reflect a strengthening of these Black Friday/Cyber Monday trends.

Recovery in the sector here may also be held up by increased competition from Northern Ireland retailers with the euro/sterling differential still making it advantageous for shoppers to skip across the Border for bargains.

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