November 29, 2022

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Cost-of-living crisis casts shadow over Europe’s Black Friday By Reuters

3 min read

© Reuters. FILE PHOTO: A woman walks past a sign advertising Black Friday offers at a House of Fraser store in Manchester, Britain November 22 2019. REUTERS/Phil Noble

By James Davey

LONDON (Reuters) -Europe’s retailers are hoping Black Friday discount day will get shoppers spending, though it is taking 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.

As of 1000 GMT, Barclaycard Payments, which processes 1 pound ($1.21) in every three pounds spent in the UK, had seen a volume of payments broadly in line with 2021, it said.

“Our data shows that Black Friday is off to a steady start this year, despite the challenging economic backdrop,” Marc Pettican, head of Barclaycard Payments, said.

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.

SLOWER PACE

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, but it estimates 166.3 million people still plan to shop from Thanksgiving Day through Cyber Monday.

Amazon (NASDAQ:) has forecast its slowest revenue growth for any holiday period in years and workers at its sites across the world, including in the United States, Germany and France, have been urged to strike on Black Friday over pay.

Shop assistants at fashion giant Zara also protested in Madrid, demanding higher pay.

British electricals retailer Currys said consumers were prioritising essential domestic products like microwave ovens and energy-saving items like air fryers and heat pump tumble dryers.

“This is definitely the year of the air fryer,” chief commercial officer Ed Connolly told BBC radio.

But consumers looking for the latest iPhones could be disappointed, after Apple Inc (NASDAQ:)’s warning that China’s zero-COVID policy was squeezing production at a key factory.

More than a decade since it was 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 = 0.8254 pounds)

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