Shoppers splurge at Black Friday sales smashing market expectations

Budget-conscious shoppers splurged at Black Friday to push retail November sales to book their strongest monthly increase of 2023.

Shoppers opened their wallets in November, crowding shopping malls and splashing out at online retailers to scoop up deals during Black Friday sales.

Fresh data, released by the Australian Bureau of Statistics on Tuesday, showed retail turnover surged by 2 per cent in November, its biggest monthly gain of 2023, to total $36.5bn, according to the seasonally adjusted figures.

The result outperformed market expectations of a more modest 1.2 per cent lift in spending.

Shoppers flocked to the Black Friday sales to take advantage of discounts. Picture : NCA Newswire / Nicki Connolly

But economists cautioned that the stronger than anticipated increase, bolstered by Black Friday discounts, was likely to be a one-off as high inflation and soaring interest rates force households to crimp their discretionary spending.

Robert Ewing, ABS head of business statistics, said the jump in consumer spending in November was due to the Black Friday discounts which had again proved to be a “big hit” among shoppers.

“The strong rise suggests that consumers held back on discretionary spending in October to take advantage of discounts in November. Shoppers may have also brought forward some Christmas spending that would usually happen in December,” Mr Ewing said.

“Retailers told us that the success of Black Friday sales was boosted by consumers seeking out discounts in response to cost-of-living pressures.”

Spending on discretionary goods, including household appliances, clothing and footwear vaulted, while the rise in eating out, takeaway and at the supermarket was more modest. Picture: NCA NewsWire / David Swift

Spending on discretionary goods drove most of the increase – turnover in household goods vaulted 7.5 per cent, climbed 4.2 per cent at department stores, and rose 2.7 per cent for clothing and footwear.

However, there were pockets of weakness with spending at cafes, bars and restaurants, and at the supermarket checkout, rising by just 0.4 per cent.

Uncertain outlook for retailers

Many retailers, in an attempt to avoid being stuck with excess stock, offered longer and earlier discounts in an attempt to cash in on constrained household budgets.

The Australian Retailers Association, the peak industry group for the sector, forecast purchases made over the Black Friday-Cyber Monday weekend reached $6.36bn – accounting for more than a quarter of all holiday spending.

But despite the strong spending, retailers have given a mixed reading on the key Christmas season. While some booked steady sales, others have reported a marked decline in activity.

Indeed, while fresh consumer confidence data released by ANZ showed an uptick in January, shoppers were deeply pessimistic last year, with measures hovering at near-record lows as the RBA continued its aggressive campaign against inflation.

Following the Black Friday sales, economists expect a softer reading in December as discounts brought forward spending, rather than representing a solid start to the holiday trading period.

The fresh retail sales reading comes ahead of the Reserve Bank’s February 6 rates call, where it is widely expected to keep rates on hold at 4.35 per cent.