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Shoppers to spend more than 10 billion pounds this Black Friday

London - Singles Day may have brought record-breaking sales of 25.3 billion US dollars for and 19.1 billion US dollars respectively for Chinese e-commerce giants Alibaba and JD.com last Friday, but with Black Friday around the corner, UK retailers are said to be preparing for their own record-breaking sales day. Shoppers are predicted to spend more than 10 billion pounds this Black Friday, as retailers across the nation participate in the discounting holiday.

Higher prices and increased retailer participation are the two main factors driving Black Friday spend this year, as total sales during the sales period is set to increase 3.8 percent according to GlobalData. Spend during the Black Friday period, which runs from Monday, November 20 to Sunday, November 27, is predicted to increase 3.8 percent year-on-year to 10.1 billion pounds, accounting for 10.4 percent of the total Q4 spend. Even though growth for Black Friday spend is forecast to slow year-on-year and footfall for the promotional shopping day is set to drop, the data analytic firm expects more retailers to participate in the sales event this year in an attempt to stimulate shoppers spend.

Shoppers to spend more than 10 billion pounds this Black Friday

Shoppers set to spend 10.1 billion pounds this Black Friday

Springboard predicts a 0.6 percent dip in footfall across the UK’s high streets, retail parks and shopping centres during this year’s Black Friday, as more household hold back on spend due to rising inflation, increasing interest rates and higher constraints on budgets, which put pressure on their disposable income. Although retail parks are expected to the sole exception to this decline, set to see a 0.1 percent increase year-on-year, this is linked to the rise of services such as click and collect, as well as the growing number of leisure opportunities offered at shopping centres.

Fashion retailers, such as Asos and Topshop, have been highlighted as some of the leading retailers set to drive spend in its sector, notes GlobalData. “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,” commented Eleanor Parr, retail analyst at GlobalData. “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 retailers be warned of offering discounts over an extended period

However, fashion retailers’ margins have been hit by strong inflation, which may have forced some retailers to increase prices to mitigate margin loss. This could see a number of retailers unable to offer the level of discount advertised in 2016, which may put off consumer spend, as they will feel less inclined to make a bargain purchase on impulse. “As a result, retailers will need to be creative with how they advertise Black Friday promotions this year, for example promoting multi-buy offers or free gifts with purchases if they cannot afford to offer large discounts,” added Parr. In addition to becoming more creative with Black Friday promotes, retailers will have to balance out their discounting as the traditional sales day has now been expanded to a sales period.

“A lower proportion of Black Friday spend will fall on the Friday. When Black Friday was first exported from the US to the UK the event promised impressive discounts for one day only. However, over time retailers have taken the opportunity to extend the event, both to encourage more consumers to participate but also to relieve operational pressures. In 2016, most retailers advertised their Black Friday deals as starting on the Friday and finishing on Cyber Monday, however Amazon took this further advertising a Black Friday sale running for 12 days between 14-25 November and has already highlighted its sale will run for at least 10 days this year. In 2017 we expect 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,” continue Parr.

Retailers including Debenhams and Gap already have sales on at the moment, with the department store chain offering discounts as high as 30 percent and Gap 40 percent. Although these sales offer may be appealing to shoppers, this early sale offer may lead to a dip in Black Friday sales, as customers are aware they can still buy a new outfit with discount over the next few weeks without having to braces the high street during Black Friday. “Furthermore, as more retailers advertise their Black Friday deals early, other players will be forced to participate to remain competitive. This is particularly tricky for retailers that price match, such as John Lewis, which will have no choice but to bring down prices early, impacting margins and stock levels. Retailers must prepare by ensuring they have the operational capacities to cope with an influx in trade over a sustained period.”

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