Retailers are gearing up to enter a tougher Christmas than last year, as the Black Friday “discount mentality” makes it ever harder to persuade customers to part with their cash for full-price items.
The impact of last year’s Black Friday on consumer mindset, combined with the warmer weather so far this season, will make for a very different Christmas trading period this year, predicted Meg Lustman, chief executive of Hobbs.
“This year, the customer is playing the long game: she believes there will be another promotional bonanza and is therefore delaying purchases, particularly as the weather isn’t forcing her into more immediate purchases,” said Lustman.
Asda revealed this week that it is pulling back from Black Friday, but Brian Brick, chief executive of Moss Bros, said most retailers he had spoken to would be participating in promotional events surrounding the discounting day on November 27.
“We all traded well on the day last year and after that it was a bit tougher – it’s a question of when you take [the sales] and at what margin,” he explained.
“It has been a very slow start to the winter season,” added the chief executive of one high street footwear multiple. “Perhaps we can pull some trade back [pre-Christmas] with some frosty weather and some boot-related Christmas shopping.
“Like many retailers, I think it will be at best an OK year, but more likely a mediocre one.”
Last week, Marks & Spencer chief executive Marc Bolland said he thought heavy discounting would continue over Christmas.
“It will be spiky,” he said. “Like last year, we will see some strong promotions from our competitors and that makes trade more difficult. Black Friday gets shoppers into that discount mentality. We will have to play it by ear and see if we follow them.”
Retail consultant Richard Hyman said promotions have become a permanent feature of the market, and Black Friday will inevitably eat into trading over Christmas this year.
“Most retailers feel they have to shout price to drive footfall to stores, as with their websites,” he said. “According to my calculations, 52% of fashion retailers are currently running price promotions. More worrying is that Christmas looks unlikely to provide much chance for full margin business – 56% of current Christmas promotions are already built around price and that’s before Black Friday.”
He added that December sales by value will be ahead of last year, but the price cuts needed to drive them will hit margins.