British retailers reported strong online demand in early “Black Friday” trading, as shoppers chased deals in a spending spree that is expected to top last year’s record level.
Shoppers are looking for bargains ahead of an expected rise in prices in 2017 as a weaker pound starts to push up the cost of imports, putting household finances under pressure.
Last year marked a change in the nature of the U.S.-imported discounting day. It generated record revenue but was subdued in terms of store-based sales, with shoppers put off by bad weather and memories of chaos and scuffles in 2014. This year, shoppers are focusing even more online.
“It will be the busiest trading day of the year,” Argos CEO John Rogers told Reuters.
“It’s becoming an increasingly mobile (phone) shopping day. We’d expect to be north of 60 percent online and almost 80 percent of our online orders are coming from mobile,” he said.
John Lewis, Britain’s biggest department store group, said its website was taking five orders every second.
UK retailers will be hoping the promotions kick-start Christmas trading, building on a strong October when cold weather and Halloween boosted sales.
Many, including Amazon, Argos, Dixons Carphone and Tesco, have extended Black Friday to run for a two week period either side of the main day.
PRESSURE
UK consumer spending has held up since June’s vote to leave the European Union. However, the Bank of England and many economists fear higher prices caused by the Brexit hit to the value of the pound and slower jobs growth will eat into households’ spare income next year.
Wednesday’s fiscal statement from finance minister Philip Hammond also did little to ease looming pressure on household budgets.
PwC, the accounting and consultancy firm, is forecasting revenue from Black Friday promotions to grow by 38 percent to 2.9 billion pounds ($3.6 billion).
Researcher ShopperTrak forecasts Friday’s in-store shopper numbers will be down by 2.8 percent year-on-year – a second straight year of footfall decline.
Some analysts argue Black Friday discounts pull forward Christmas sales that store groups would otherwise have made at full price and can dampen business in subsequent weeks.
Retailers, however, say carefully planned and targeted promotions with global suppliers allow them to achieve a sales boost while maintaining profit margins.
Argos’s Rogers countered by saying there was no “smoke and mirrors” at his firm. “Customers are great at sniffing out a bargain. They know when something’s a good deal,” he said.
And the popularity of Black Friday is spreading overseas.
“1.2 percent of the population of Denmark was on our Danish website at 1 minute past midnight … looking at our Black Friday deals. 60,000 people,” tweeted Dixons Carphone CEO Seb James.
