Black Friday putting pressure on retailers in run-up to Christmas

US concept is here to stay, but consumers warned not to assume prices are rock bottom

Black Friday was initially welcomed by retailers “who had fallen to their knees in the wake of the economic crash”.  Photograph: Nick Bradshaw

Black Friday was initially welcomed by retailers “who had fallen to their knees in the wake of the economic crash”. Photograph: Nick Bradshaw

 

Black Friday is welcomed by many Irish consumers, with more than €50 million set to be spent over the course of the weekend, but retailers say they are becoming increasingly “jaundiced” by the concept as it pressures them into discounting goods and services in the run-up to Christmas.

Black Friday first came to Europe via the Walmart-owned Asda in 2013 and has grown into a major retailing event that has come to rival the traditional winter sales in the eyes of many consumers.

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Thomas Burke, director of Retail Ireland, said its members’ view of Black Friday had “evolved quite considerably since it first emerged several years ago”.

He said sales figures from last December were 2.6 per cent down on the previous year, with the decline attributed to higher levels of spending towards the end of November.

Black Friday was initially welcomed by retailers “who had fallen to their knees in the wake of the economic crash”, he said. It was “widely seen as an opportunity to get consumers spending and a chance to drive footfall and demand, which would kick-start Christmas spending”.

Displaced demand

However, he said the sales period had grown significantly, leading to “almost a jaundiced view of it in some quarters as it has displaced demand and spending ahead of the Christmas season when stock is traditionally on sale at full price. We have seen it grow into a Black Friday fortnight.”

Smaller retailers can never compete on price with the giants with their very deep pockets

He said many retailers would like to scale back their discounted offerings on Friday and over the course of the weekend, but “most will be reluctant to abandon it because competition is so fierce. The challenge is how to balance margins, sales and prices.”

He pointed out that smaller retailers “can never compete on price with the giants with their very deep pockets and an ability to strike better deals with wholesalers and to buy in bulk. They simply cannot go head-to-head on price but they can compete on the basis of customer service and the different offerings they have.”

Credit rating agency Moodys was equally downbeat about the impact of Black Friday on retailers. David Beadle, a senior credit officer with the agency, said it “largely brings forward purchases from closer to Christmas, often at lower margins, and is therefore credit negative for the European retail sector overall and rarely positive for individual companies”.

Lowest price

Consumers should also be wary of assuming that simply because a retailer says a product is on sale, it is selling at the lowest price. British consumer group Which? tracked the prices of 94 popular products which were last year included in Black Friday deals at retailers – many of which sold in both the UK and the Republic – and found that nearly nine in 10 “deals” were cheaper at other times of year. Nearly half of such products were found to be cheaper in the six months after Black Friday.

“While retailers are bombarding us with promises of great discounts and time-limited sales, it’s clear that not all deals are as good as they might appear,” said Alex Neill, managing director of home products and services at the consumer group.

“To bag a bargain, do your research and don’t get carried away by the hype when shopping in the upcoming sales,” he added.