Is Black Friday causing pain for retailers?
Today is Black Friday, the retail event that originated in the US but has made its way to this side of the Atlantic in recent years.
For many it now marks the start of the Christmas shopping period, but for an increasing number of retailers it appears to be somewhat of a headache.
Professor of Marketing at UCD’s School of Business Mary Lambkin said she’s not sure retailers are fully souring on the idea of Black Friday.
“The final quarter of the year in the run-up to Christmas represents around 40% of sales for retailers, so having a good pre-Christmas period is hugely important to their whole year.
“To have something like Black Friday where there’s a great deal of promotion and it builds a bit of excitement and gets the whole season going is actually a really valuable and good thing for retailers.
“But, in order to deliver on that obviously it has some headaches, for example if you get a big spike in sales … you have got to have stock to meet that.
Ms Lambkin says this can raise questions such as where will the stock will be stored and what if it doesn’t sell out.
She added “by having to give discounts, you’re having to give away your profit margin and you would prefer to sell at normal rates obviously”.
On whether or not sales events for Black Friday are actually creating new sales as opposed to just compressing demand into specific time frames, the UCD lecturer says there doesn’t seem to be “any real research that can prove to me that there is actually a net increment in sales for retailers.
“But most people would say for instance that they have a budget for their Christmas spending and they distribute that then according to what they need and what they want to buy over the whole period and some of the money they keep for the January sales.
“So, a lot of it is to do with just moving it around rather than actually adding a huge amount in sales.”
There is an ongoing shift to online sales from bricks-and-mortar retailers. Ms Lambkin said this shift is going in favour of online at a rate of 20% a year “and it’s not going to change any time soon”.
She added that about 12% of all retail purchases are now made online and that about €5 billion annually out of €40 billion in retail sales in Ireland “is now going online and about 60% of that five billion is going out of the country”.
She said that is a major leakage and is causing a lot of pain for retailers here.