Introduction: Black Friday could be bleak as consumers cut back
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The stakes are high for retailers today, as they try to tempt shoppers to spend with a flurry of Black Friday offers.
But they could face a “Bleak Friday” this year, economists say, as the cost of living crisis means consumers will resist discounts on new electronics kit, homeware, clothing and the like.
Plus, ongoing strikes at Royal Mail could deter people from shopping online.
Black Friday, originally an American post-Thanksgiving wheeze, is now more of an global event – thanks to international retailers looking to kick-start the festive rush.
These days, ‘Black Friday’ deals often last at least a week – running into the pre-Christmas offers, and then the January sales. But some of the offers may not be as generous as they look (and may get more generous once retailers get desperate to shift stock).
The CEBR thinktank reckons we could see a “Bleak Friday”, with discounts unlikely to save struggling retailers as UK consumers cut back spending by an estimated £1.5bn in the last quarter of this year.
The CEBR say:
The cost-of-living crisis, combined with warnings that discounts are often more generous at other times of year and the threat of a Royal Mail strike, will mean that it is a weak year for Black Friday sales and we may see January sales start early in an attempt to shift stock.
Black Friday can also suck in spending that would have happened anyway, either before or after the big day/week. This year, people simply have less disposable income to spend at all, with surveys showing many households are cutting back on spending.
The CEBR says:
While 42% of Brits have reported shopping around more due to the rising cost of living, suggesting they are looking for discounts, a higher share, 65%, reported they are spending less on non-essentials due to these cost pressures.
It’s the first Black Friday without Covid restrictions since 2019, which ought to help retailers get customers into shops. But sales and profits could still be lower than 2021.
As Danni Hewson, AJ Bell financial analyst, put it:
“Friday should be one of the busiest days for UK retailers but concerns about constrained budgets and the added issue of a strike by Royal Mail workers are both expected to make the affair a rather damp squib.
Retail expert Richard Lim told the BBC he was expecting Black Friday to be a more “muted affair” with sales down on last year.
Lim said:
“Inevitably, I think what we’re going to see is consumers being much more careful with their spending.”
Also coming up today
Retail giant Amazon faces a wave of Black Friday protests and strikes, as workers stage walkouts over pay and conditions (more on that shortly).
AMAZON FACES BLACK FRIDAY PROTESTS, STRIKES IN 40 COUNTRIES; WORKERS PLAN TO STAGE WALKOUTS OVER PAY AND CONDITIONS: BBG
— FXHedge (@Fxhedgers) November 25, 2022
Royal Mail staff will be picketing outside the postal groups offices again today, in an ongoing dispute over pay. Eight more days of action are planned in the run-up to Christmas.
The UK’s wave of industrial action has deepened, with nurses announcing they will strike for two days next month.
Royal College of Nursing members will stage national strikes – the first in its 106-year history – on 15 and 20 December, with action expected to last for 12 hours on both days.
The unprecedented industrial action will seriously disrupt care and is likely to be the first in a series of strikes over the winter and into the spring by NHS staff, including junior doctors and ambulance workers.
European financial markets could be subdued, with Wall Street reopening for a half-day after Thursday’s holiday.
The agenda
-
7am GMT: Germany’s Q3 GDP report (final estimate)
-
7.45am GMT: French consumer confidence report
-
9.30am GMT: Latest UK public opinions and social trends report
-
Noon GMT: Mexico’s Q3 GDP report
Key events
Filters BETA
Amazon faces Black Friday protests and strikes
Thousands of Amazon warehouse workers across about 40 countries plan to take part in protests and walkouts to coincide with Black Friday sales today, campaigners say.
Employees in the US, UK, India, Japan, Australia, South Africa and across Europe are demanding better wages and working conditions as the cost-of-living crisis deepens, in a campaign dubbed “Make Amazon Pay.”
The campaign is being coordinated by an international coalition of trade unions, with the support of environmental and civil society groups.
Christy Hoffman, general secretary for UNI Global Union, says:
“It’s time for the tech giant to cease their awful, unsafe practices immediately, respect the law and negotiate with the workers who want to make their jobs better.”
Black Friday is “the last day of Rome stuff” for major shopping chains, argues City strategist Bill Blain of Shard Capital.
He says big retailers are:
…desperately marketing otherwise unsalable goods at suspicious mark-downs, and arranging consumer loans so they buy it.
Black Friday is an enormous marketing scam! Avoid it and shop local!
Black Friday warning as most deals are not cheaper – Which?
Black Friday bargains may not be as good as they seem, consumer group Which? warned this week.
The Evening Standard has the details:
Just one in seven Black Friday deals offer a genuine discount and the vast majority of promotions are cheaper or the same price in the six months before the sales event, a study has found.
Which? analysed 214 Black Friday deals last year across seven major retailers – Amazon, AO, Argos, Currys, John Lewis, Richer Sounds and Very – looking at their prices every day in the six months before and after last year’s event on November 26.
The watchdog found 183 (86%) were cheaper or the same as their Black Friday price in the six months before the event and 209 (98%) were cheaper or the same price at other times in the year.
None was cheaper on Black Friday alone.
Which? concluded that although there were some deals to be had on Black Friday, genuine discounts were “often few and far between”.
A poor Black Friday would be a bruising blow to retailers, as the UK slides into recession.
Richard Flax, chief investment officer at digital wealth manager Moneyfarm, says:
‘In the minds of many, the words ‘Black Friday’ induce thoughts of excess, with shoppers frantically running through aisles or slamming keyboards to secure as many bargains as possible.
However, with inflation running at record levels and the UK already in a technical recession, this year’s shopping love affair may look a little different. According to research from GlobalData, it’s predicted that with inflation taken into account Britons will spend less in the two-week Black Friday period than in previous years.
If such forecasts prove to be correct, it will add further pressure on retailers, many of whom are already feeling the burden of an extended period of market volatility, supply chain disruptions and a hangover from the pandemic.
People are prioritising buying essential domestic products this year, and trying to cut their energy bills, reports Ed Connolly, chief commercial officer at Currys.
He told Radio 4’s Today Programme that there is higher demand for items such as microwave ovens, and also energy-efficient products such as heat pump tumble dryers.
Connolly added:
This is definitely the year of the air fryers.
We’re selling two and a half thousand a day, as soon as we can get the stock in people are buying it, because it’s a very energy-efficient way of cooking.
It’s here!
Expecting Black Friday sales to be ⬆️ but shifting trends such as recommerce & focus on products like air fryers & electric blankets to help with rising fuel costs
Have you already bought? Playing “the long game”? Or not shopping@CustWhisperer
📸@BBCWorld pic.twitter.com/dzz1Rjq8zu
— Kate Hardcastle MBE (@katehardcastle) November 25, 2022
Over half of Britons expect to cut back on spending this Black Friday compared to last year, research company, Attest reports.
It found that most people expect to buy something, but are unsure how much they’ll spend.
Nearly two-thirds plan to only shop online – a potential blow to high street retailers who have put effort into store displays:
In a new blow to retailers on Black Friday, research published this morning suggests a third of families are planning to cut back on Christmas presents this year, because of the cost of living crisis.@julietdunlop reports pic.twitter.com/YmZCp0Eu79
— Good Morning Britain (@GMB) November 25, 2022
Introduction: Black Friday could be bleak as consumers cut back
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The stakes are high for retailers today, as they try to tempt shoppers to spend with a flurry of Black Friday offers.
But they could face a “Bleak Friday” this year, economists say, as the cost of living crisis means consumers will resist discounts on new electronics kit, homeware, clothing and the like.
Plus, ongoing strikes at Royal Mail could deter people from shopping online.
Black Friday, originally an American post-Thanksgiving wheeze, is now more of an global event – thanks to international retailers looking to kick-start the festive rush.
These days, ‘Black Friday’ deals often last at least a week – running into the pre-Christmas offers, and then the January sales. But some of the offers may not be as generous as they look (and may get more generous once retailers get desperate to shift stock).
The CEBR thinktank reckons we could see a “Bleak Friday”, with discounts unlikely to save struggling retailers as UK consumers cut back spending by an estimated £1.5bn in the last quarter of this year.
The CEBR say:
The cost-of-living crisis, combined with warnings that discounts are often more generous at other times of year and the threat of a Royal Mail strike, will mean that it is a weak year for Black Friday sales and we may see January sales start early in an attempt to shift stock.
Black Friday can also suck in spending that would have happened anyway, either before or after the big day/week. This year, people simply have less disposable income to spend at all, with surveys showing many households are cutting back on spending.
The CEBR says:
While 42% of Brits have reported shopping around more due to the rising cost of living, suggesting they are looking for discounts, a higher share, 65%, reported they are spending less on non-essentials due to these cost pressures.
It’s the first Black Friday without Covid restrictions since 2019, which ought to help retailers get customers into shops. But sales and profits could still be lower than 2021.
As Danni Hewson, AJ Bell financial analyst, put it:
“Friday should be one of the busiest days for UK retailers but concerns about constrained budgets and the added issue of a strike by Royal Mail workers are both expected to make the affair a rather damp squib.
Retail expert Richard Lim told the BBC he was expecting Black Friday to be a more “muted affair” with sales down on last year.
Lim said:
“Inevitably, I think what we’re going to see is consumers being much more careful with their spending.”
Also coming up today
Retail giant Amazon faces a wave of Black Friday protests and strikes, as workers stage walkouts over pay and conditions (more on that shortly).
AMAZON FACES BLACK FRIDAY PROTESTS, STRIKES IN 40 COUNTRIES; WORKERS PLAN TO STAGE WALKOUTS OVER PAY AND CONDITIONS: BBG
— FXHedge (@Fxhedgers) November 25, 2022
Royal Mail staff will be picketing outside the postal groups offices again today, in an ongoing dispute over pay. Eight more days of action are planned in the run-up to Christmas.
The UK’s wave of industrial action has deepened, with nurses announcing they will strike for two days next month.
Royal College of Nursing members will stage national strikes – the first in its 106-year history – on 15 and 20 December, with action expected to last for 12 hours on both days.
The unprecedented industrial action will seriously disrupt care and is likely to be the first in a series of strikes over the winter and into the spring by NHS staff, including junior doctors and ambulance workers.
European financial markets could be subdued, with Wall Street reopening for a half-day after Thursday’s holiday.
The agenda
-
7am GMT: Germany’s Q3 GDP report (final estimate)
-
7.45am GMT: French consumer confidence report
-
9.30am GMT: Latest UK public opinions and social trends report
-
Noon GMT: Mexico’s Q3 GDP report
