Love it or loathe it, Black Friday is back

Craig Skelton Assurance Partner, PwC United Kingdom 24/11/17

By Craig Skelton

There are many things that divide a nation. Everything, from Brexit to who’s the most annoying contestant on I’m a Celebrity Get Me Out Of Here, elicits wildly different, but equally passionate, views. Another prime example of a divisive event is Black Friday, which officially starts today - Friday 24th November however many retailers have already begun posting a myriad of deals throughout the week.

Imported a few years ago, from the traditional US Thanksgiving sales, it’s now become a huge and lucrative UK retail event. According to a new survey of 2,000 UK adults conducted for us by Opinium, the additional spending over the Black Friday period will supercharge retail sales by an eye-watering £5 billion. And that figure comes with not everyone on board, because although 51% of shoppers plan to shop over Black Friday and Cyber Monday, 34% say they’re not interested and a further 11% will intentionally avoid it.

Unsurprisingly, perhaps, our survey shows that here in London, we intend to spend the most money. Our average spend of £300 dwarfs that of shoppers in the East Midlands, East of England and Wales, who will all spend less than £150 each.

And it seems that retailers have finally caught up with the demand. The success of Black Friday initially caught them unaware, with stories of crowds fighting over widescreen TVs. Demand was such that websites melted under the pressure. In 2015, the pressure of online shoppers crashed one in five online retailers’ websites, including John Lewis, Boots and Argos.

However, our retail report, Retail Outlook: what's in store for the UK retail sector?, shows that last year was a turning point for Black Friday in the UK. In 2016, we saw more planned and targeted promotions, and in more promotionally driven sectors, these were sustained over a whole week, rather than just the weekend of Black Friday and Cyber Monday. Retailers have also invested heavily in improving their computing capabilities and delivery networks to cope with demand.

Companies are finding it harder to deliver big price cuts amid strong inflation partly resulting from the fall in the value of the pound since last year’s Brexit vote, as well as rising business rates and other costs. This has led to some – on the face of it – topsy turvy business models being showcased. For example, some internet-only stores are selling their wares via seasonal pop-up shops. Amazon will open a guerrilla store in central London that will last as long as one of its Black Friday deals. The pop-up shop will feature the company’s best-sellers in a mock room.

This, perhaps, suggests a resurgence – or at least appreciation – for shops with a physical presence. Our latest retail research, with the Local Data Company and covering 500 high streets and multiple retailers' openings and closures by region and business, shows that despite the advance of online retail and a testing economy, the number of chain retail outlets closing on the UK’s high streets is at its lowest level for seven years.

While charity shops, shoe shops, gift shops and women’s clothing shops were among the hardest hit by closures in the first half of 2017, tobacconists, beauticians and coffee shops are among those which have continued to grow.

This reflects a more stable environment, with consumer confidence proving more resilient than expected as the year unfolded, although a leaner, fitter high street will probably need to evolve further.

And finally, if you think that Black Friday is a fantastic opportunity for Londoners and people up and down the country to selflessly spend their hard-earned cash on Christmas gifts for their loved ones, you’re wrong. Research shows that only 23% of Black Friday purchases are made for others and furthermore, our survey found that the majority left, who are buying for themselves, are mostly men!

With that I am off to turn my attention by the Celebrity Jungle before thinking about what’s going to happen at Christmas for retailers.

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