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UK retailers look to Black Friday to kick start Christmas sales
November 21, 2017 / 2:32 PM / 22 days ago

UK retailers look to Black Friday to kick start Christmas sales

LONDON (Reuters) - After suffering their biggest decline in sales volumes for four-and-a-half years in October, British retailers are pinning their hopes on Black Friday discounts to get shoppers spending again.

Shoppers walk through the entrance to a store promoting "Black Friday" in Oxford Street, London, Britain November 24, 2016. REUTERS/Peter Nicholls

The annual promotional event was imported from the United States into Britain by Amazon (AMZN.O) in 2010 and has got bigger every year, even if - after chaos and scuffles in stores in 2014 - it has returned to being a mainly online affair.

Research firm GlobalData forecasts UK spending during the Black Friday period - defined as Monday Nov. 20 to Monday Nov. 27 - will grow 3.8 percent year-on-year to 10.1 billion pounds ($13.4 billion), or about 10.4 percent of their total estimate for the last three months of the year.

“We expect more retailers to take part this year in an attempt to stimulate the waning demand they have faced over September and October,” said GlobalData’s Eleanor Parr.

Consumer spending - the engine of British economic growth - is being squeezed as inflation rises and wage growth falters, and as shoppers worry about the potential impact of Brexit.

Earlier this month, the Bank of England added to the pressure by raising borrowing costs for the first time in a decade. Last week, official data showed UK retail sales volumes fell 0.3 percent year-on-year in October, though the numbers were distorted by a strong October last year. [nL8N1NM2Q2]

Black Friday, the day after the U.S. Thanksgiving holiday, was so named because spending would surge and retailers would traditionally begin to turn a profit for the year, moving from the red into the black. It falls on Nov. 24 this year.

THREE PEAKS

Its popularity has meant Britain’s Christmas trading season now has three peaks - around Black Friday, the week up to Dec. 25 and the post-Christmas sales.

A worker picks orders at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017. REUTERS/Darren Staples

Like last year, retailers including Amazon, Dixons Carphone (DC.L) and Sainsbury’s (SBRY.L) Argos are stretching promotions over one to two weeks, hoping to smooth out demand and reduce pressure on supply and distribution networks.

However, analysts say a drop in sterling since Britain’s 2016 vote to leave the European Union has driven up import costs for retailers, squeezing their margins and meaning they may not be able to offer the scale of discounts seen last year.

Shoppers are likely to be checking prices carefully too, with several consumer groups warning some Black Friday deals are no better than other sales during the year.

Among retailers, Black Friday still divides opinion.

Supporters argue carefully planned, targeted promotions with global suppliers allow them to achieve a sales boost while still maintaining profit margins.

But critics say the discounts suck forward Christmas sales that retailers would otherwise have made at full price and can dampen business in subsequent weeks.

“I bet most retailers wish it was an American import that never arrived,” Steve Rowe, Marks & Spencer’s (MKS.L) chief executive, told reporters this month.

M&S will not be participating this year.

($1 = 0.7557 pounds)

Editing by Mark Potter

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