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Cost-of-living crisis casts shadow over Europe’s Black Friday
Global Banking & Finance Review®
Company
By James Davey
LONDON (Reuters) -Europe’s retailers are hoping Black Friday discount day will get shoppers spending, though it takes place against a backdrop of a worsening cost-of-living crisis and the distraction of the soccer World Cup.
Retailers across Europe fear the overall Christmas trading season could be the worst in at least a decade as shoppers cut back, while the costs of doing business show no sign of abating, squeezing profit margins.
Double-digit inflation has dented consumers’ purchasing power and their confidence is also at or close to the gloomiest on record as soaring energy bills add to the spiralling cost of living.
But to help budget their finances, consumers have begun their Christmas shopping early this year and many still look set to shop on Black Friday.
Some consumers may, however, have other priorities, with Wales, England, the Netherlands and Poland all in action on Friday at the World Cup.
Britons will spend 8.7 billion pounds ($10.5 billion) over the Black Friday weekend (Nov. 25 to Nov. 28), according to research by GlobalData for VoucherCodes – up 0.8% year-on-year but masking a big drop in volumes once inflation is accounted for.
This year, consumers will use Black Friday, which has become more of an online event, much more for jumping on spontaneous deals and for Christmas gifts, rather than for bigger, delayed purchases, according to consultants McKinsey.
Its research shows a quarter of UK consumers have already done their Christmas shopping, while about one in 10 is planning to do most of it on Black Friday.
Idealo, the European price comparison portal, said 65% of online Italian shoppers are ready to buy a product during the event.
In France, 70% plan to shop on Black Friday and Cyber Monday, according to research by PwC France.
However, the Spanish are less keen, with just 24% of shoppers planning to take advantage of Black Friday deals to get a head start on their Christmas shopping, according to the Spanish Association of Mass Consumer Goods Companies.
In the United States, the National Retail Federation (NRF) has forecast holiday sales would rise at a slower pace this year, while Amazon has forecast its slowest revenue growth for any holiday period in years.
AIR FRYERS
In Britain, the Black Friday trading period is particularly important for the likes of department store group John Lewis, consumer electricals retailers Currys and AO World, and general merchandise retailer Argos, which is part of supermarket group Sainsbury’s.
“We’re seeing a significant change to behaviour, we’re seeing people prioritise things like essential domestic products … things like microwave ovens, air fryers,” Currys chief commercial officer Ed Connolly told BBC radio, noting strong demand for other energy saving products such as heat pump tumble dryers.
Some major retailers, including Marks & Spencer, largely shun the event.
More than a decade since being brought to Europe by Amazon, Black Friday’s worth to retailers still divides opinion.
Supporters say carefully planned promotions in close co-operation with global suppliers allow retailers to boost sales and maintain profit margins.
Naysayers argue the discounts suck forward Christmas sales with reduced profits and undermine consumers’ willingness to pay full price again before the festivities.
($1 = 0.8273 pounds)
(Reporting by James Davey in London; Additional reporting by Giselda Vagnoni in Rome, Dominque Vidalon in Paris and Corina Rodriguez in Madrid; Editing by David Holmes and Kim Coghill)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Consumer perception refers to the way consumers view and interpret information about a product or service, influencing their purchasing decisions and brand loyalty.
Retail trade involves the sale of goods and services to consumers for personal use. It encompasses various businesses, including stores, online shops, and marketplaces.
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to a loss of confidence in the financial system.
The UK economy refers to the economic system of the United Kingdom, characterized by a mixed economy with a combination of private and public enterprises.
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