Britain's Black Friday 'here to stay'

JAMES DAVEY
Last updated 12:15 22/01/2014

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Black Friday promotions look set to become a permanent - and bigger - fixture of Britain's retail calendar after store groups embraced the American tradition for the first time, with its impact taking even seasoned retailers by surprise.

US discount day Black Friday is the Friday following Thanksgiving Day, the fourth Thursday of November, and is so named because it traditionally indicates the point at which American retailers begin to turn a profit, or go "into the black".

Last year marked the first time UK store groups such as Asda, Dixons Retail and John Lewis participated in a really serious way and trading updates published in January showed it had a major influence on the shape of Christmas sales.

"The genie's now out of the bottle. It's here to stay," said Neil Saunders, retail analyst at Conlumino.

"Retailers see that it drives some success, they will inevitably want to continue that into next year."

Britain is not alone in seeing new Black Friday activity. In Spain, for example, department store El Corte Ingles used the term "Black Friday", in English, to advertise price cuts of up to 50 per cent on products including electronics and clothes.

Last week Dixons, Europe's Number 2 electricals retailer by sales, reported a 5 per cent increase in sales at UK and Ireland stores open over a year in the nine weeks to January 4, highlighting a kick-start to Christmas sales from promotions over the Black Friday weekend.

"In the UK we now celebrate Thanksgiving it seems," said Chief Executive Seb James, noting that Black Friday itself was the firm's fourth biggest trading day of the year.

"We're certainly planning that next year's Black Friday will be big again," he said.

FIGHTING
John Lewis, Britain's largest department store retailer, also experienced a new pattern to festive trade.

"This Christmas has seen trade take a different shape to previous years, with an early peak driven by Black Friday and a huge surge in the final 10 days," said Managing Director Andy Street.

Black Friday was John Lewis' biggest ever day for online orders.

For the first time Asda mirrored the Black Friday flash sale that has been held by its US parent Wal-Mart, the world's biggest retailer, for the past decade, offering a total of half a million products at special prices.

While customer demand was high, with an over 400 per cent technology sales uplift when compared with the previous week's sales, Asda's event was marred by fights breaking out among shoppers chasing limited stock in some crowded stores.

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Whether embracing Black Friday actually makes commercial sense for retailers is open to debate.

Analysts reckon it can pull forward sales that store groups would otherwise have made at full price, can blunt sales in subsequent weeks and also leaves consumers expecting more pre-Christmas promotions.

Asda argues it can protect profit margins by leveraging the huge global purchasing power of its parent, with many of the products it sold on Black Friday - such as a Cyclone Explorer 7 inch tablet for £49 ($97)- specially sourced for the event.

Dixons says it can similarly maintain margins by placing especially large orders with suppliers.

"Discounting is a bit of a misrepresentation in our market," said chief executive James.

"We'll get our suppliers to run their factory making one model to make the product cheaper so we can sell it cheaper."

- Reuters

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