UK retailers’ profit margins have been squeezed since Black Friday’s introduction to the UK, new research has revealed.
According to an analysis of the UK’s top ten retailers by KPMG, cumulative sales revenue has stagnated and profit margin has declined since the US discounting event hit the UK in 2013.
As profit margin wavered between 3% and 3.6% from 2008 to 2012, it fell to 0.6% in 2013, the year of Black Friday’s debut.
This recovered to 2.1% in 2014 before nose diving to -2.6% in 2015, and climbing back up to 1.5% last year.
Meanwhile, cumulative annual sales revenue increased year-on-year by 0.09% to £173.6m in 2013 and 5.6% to £183.9m in 2014.
But in 2015, it slipped back to 3.8% to £177m and down to £175.6m in 2016.
Paul Martin, UK head of retail at KPMG, said: “Amidst all the hype of Black Friday – as consumers scrabble for bargains and retailers frantically parade their discounted wares – it is easy to overlook the undercurrent created by the retail event.
“Retailers, dazzled by top-line sales growth, could easily underestimate the impact prolonged discounting is having on their bottom line.
”Our latest analysis, which looked at the UK’s top ten retailers, reinforces a trend we’ve suspected for some time now: retail sales revenue has stagnated and profit margins have been squeezed in recent years.
“Black Friday and similar discount-based retail events have certainly played a role in this state of affairs, but mounting cost pressures more broadly – as well as the overarching economic situation – will also have had a significant impact.”