NEWS

Black Friday Deals 2016 May Never Be The Same Again After Post-Brexit Pound Fluctuations

Say goodbye to chaos.

08/11/2016 00:07
Luke MacGregor / Reuters
Frenzied scenes as shoppers fight over deals on Black Friday 2014

Frenzied scenes of shoppers fighting for the best Black Friday deals could be a thing of the past as consumers tire of its promotions and post-Brexit currency fluctuations play havoc with retailer’s profits, experts have said.

Retail analysts have told The Huffington Post UK that big stores might next year offer more lower-quality products that bring assured profit than eye-catching deals on big name brands - or stop participating in Black Friday altogether.

And it comes as new research released today suggests consumer appetite for Black Friday has waned even before these changes, with fewer Brits saying they plan to take advantage of the deals this year.

Luke MacGregor / Reuters
Shoppers fight over deals at an Asda store in 2014. The retail giant pulled out of Black Friday last year

Nick Carroll, Senior Retail Analyst at Mintel Research told The Huffington Post UK: “Next year it might be that the real bargains will be gone, depending on what people want.

“There will always be so-called tent pole deals to get people interested and cut through the noise.

“While these draw lots of attention and drive the footfall retailers need, they may be fewer in quantity next year.”

OLI SCARFF via Getty Images
There were signs of consumer fatigue on Black Friday 2015

Carroll said it is possible that consumers have been made wary by the post-Brexit vote economy. “The impact of the more uncertain times we live in means that there can be changes in consumer thinking,” he said.

With electricals being one of the biggest categories on Black Friday, and with many electronics traded in dollars, the falling exchange rate means that the same money will buy less.

Since the vote on June 24, the pound fell to a 31-year low against the dollar in July ($1=£1.2908) and then again in October (£1.2123).  

Bloomberg
Bloomberg tracks the falling value of the pound against the dollar since June

Turmoil in currency exchange rates prompted the Marmitegate row between supermarket giant Tesco and consumer goods firm Unilever in October.

The cost of an Apple Mac Pro jumped by at least 20% overnight last month, and Swedish home appliances brand Electrolux made a similar move on its fridges and washing machines.

And as retailers attempt to predict trading in advance, many may opt to secure cheaper goods with a higher profit margin - meaning they can afford future fluctuations. 

Bloomberg via Getty Images
Walmart's Asda brought the US-shopping phenomenon to the UK

Carroll said this meant offers on well-known brands might be fewer in number next year.

“We’d expect better planning from retailers now Black Friday is well known in the UK,” he said.

Yet problems could arrive sooner for some retailers, with a survey of 2,000 shoppers suggesting many may becoming tired of the deals on the last Friday of November.

Retail Economics
Some 79% of shoppers surveyed said they wouldn't be tempted by Black Friday deals this year

Research by consultancy Retail Economics found stores are expecting a higher level of demand this year, but that fewer shoppers themselves said they expect to participate in Black Friday.

Richard Lim, Retail Economics chief executive, told HuffPost: “There’s a mismatch between what retailers expect demand to be and what consumers admit they plan to spend.

“Last year some customers of big online retailers may have been frustrated by the online experience, so they may well head back into stores this year.”

Retail Economics
Around 74% of those surveyed said they would spend less this year than previously

While they survey found some 74% of consumers said they plan to spend less this year than last, the explanation for this could be simple.

That’s because the deals and offers Black Friday has become perhaps best known for are specifically designed to inspire impulse purchases.

Carroll said: “Think of Amazon’s Lightning deals - they last a really short time and there’s lots of buzz around them on deals websites.”

Rob Stothard via Getty Images
Retail Economics found younger people 18 to 24 the most engaged by Black Friday

Malcolm Pinkerton, VP of e-commerce at analysts Kantar Retail told HuffPost consumers are less surprised by Black Friday now, and retailers are no longer rushing to provide deals at the last minute.

“Retailers are being so much more planned with their promotions now,” he said. “Consumers are more savvy than ever - they know a good deal when they see one.

“There will be good deals to be had but these will be fewer and further between.

Consumers are more savvy than ever - they know a good deal when they see one. Malcolm Pinkerton, Kantar Retail

“Far fewer retailers are getting involved. We are unlikely to see the frenzied scenes of previous years.”

In 2014, shoppers at an Asda store in Wembley, north London, were observed fighting with each other for heavily discounted televisions. Outbreaks of violence were reported elsewhere.

Pinkerton added: “While consumer spending has held up so far, post-Brexit prices rises could impact consumer confidence next year.

Bloomberg via Getty Images
Chaotic scenes in 2014 encouraged shoppers to go online in the hunt for deals

Lower demand during Black Friday could help retailers be more successful across the Christmas period. “Fading demand for Black Friday is not necessarily a bad thing for retailers,” Lim said.

And those shoppers who stick around might appreciate it too.

He added: “It also eases pressure on capacity constraints for retailers who have previously struggled with crowded stores, failing websites and poor customer experiences.”

Also on HuffPost

Suggest a correction
Comments

CONVERSATIONS