‘Bigger than Boxing Day’: The rise and rise of Black Friday sales

Long queues outside department stores before sunrise and fighting through crowds of bargain hunters: many Australians still remember a time when Boxing Day was the biggest shopping day of the year.

But those scenes have become less of the norm. Instead, festive shopping starts in November as Black Friday sales kick off.

This year, Black Friday sales will be bigger and longer than Australians have ever experienced.Credit: Simon Schluter

“Black Friday will be the more dominant sales day,” said consulting group Retail Doctor CEO Brian Walker. “The manner in which we shop is changing very dramatically.”

Across this weekend, an estimated six million Australians will be flocking to bricks-and-mortar stores and pouncing on online sales alike to make the most of the Black Friday and Cyber Monday sales that begins on the last Friday of November and stretches to the following Monday.

Amazon Australia country manager Janet Menzies at the Kemps Creek fulfilment centre.Credit: James Brickwood

As a nation, we’re expected to spend more than $6.3 billion across four days as we seek out discounts and deals to get ahead of Christmas shopping. By all accounts, this year’s four-day sales period will blow previous years out of the water.

“There’s no question that the sale has become much more popular with Australian customers and across the board. It really has become this highly anticipated shopping event,” said Amazon Australia chief executive Janet Menzies.

“It’s been really good to see the competition step up.”

Black Friday, a retail phenomenon that became popular in the US in the 1980s, has spread to all corners of the world. In Australia, even 13 interest rate rises are not expected to get in the way of shopping: Westpac research shows 74 per cent of Australians will be actively seeking bargains and deals to make their dollars stretch further.

Bigger, longer and cheaper deals

Everyone this masthead spoke to reported the same trends this year: Black Friday sales have begun earlier than usual and are going for longer; discounts are bigger and deals are better; shoppers are doing their research and comparing before purchasing; and people are using the sales to buy more expensive purchases they’ve been sitting on for a while.

It’s not just retailers or shopping platforms that are participating: supermarkets and even banks have joined the fray, with Everyday Rewards spruiking savings for groceries at Woolies and Westpac integrating cashback offers to its banking app. Samsung unveiled ‘TGI Black Friday’ flash sales to offer reduced prices every Friday for the month of November.

The rising cost of living has been a major driver behind the scope of this year’s sales as Aussies ‘trade down’ items like steak or champagne for mince or prosecco, and turn to private label brands when shopping.

“A large portion of our customers now use Black Friday as the kick-off event to dedicated Christmas shopping,” said Kmart and Target CEO John Gualtieri. “Our customers are telling us that the Black Friday sale is key for many to stock up and secure those big-ticket items and gifts.”

When consumers do choose to spend, retailers are watching closely – and responding. The pullback in consumer spending has pushed some brands that have never taken part in Black Friday to participate for the first time. This year, IKEA Australia is offering customers a 15 per cent discount across its entire range, with the exception of food.

IKEA Australia is hoping the 15 per cent Black Friday sale will entice shoppers into stores.Credit: Ryan Stuart

“We’re very aware of the changing economic times we’re living in,” said IKEA Australia sales manager Tim Prevade.

The homewares giant is hoping the 15 per cent discount will entice customers into the showroom-style stores, which have experienced lower foot traffic recently and fewer purchases on high-value purchases like sofas, bedroom suites and kitchens.

“We certainly see the insights across the board, and we’re not immune to that by any means,” he said.

‘A trend you have to participate in’

For department stores David Jones and Myer, Black Friday has become a key event in the calendar and an opportunity to draw customers into stores.

“With the evolution and size of Black Friday, we’ve got to think longer and harder about what December looks like for our customers.”

Scott Fyfe, David Jones chief executive

“Black Friday has been bigger than Boxing Day for a number of years for us,” said David Jones chief executive Scott Fyfe. “Black Friday itself will take triple the amount of money that we normally take on a Friday.”

The premium department store has focused on giving shoppers value for money after it saw the Melbourne Cup rate hike deal as a “real blow” for customers.

The size and scale of the Black Friday phenomenon means it’s not an option for David Jones not to take part – and it has also forced a rethink around the vital Christmas shopping period.

“It’s a market-driven trend, and it’s a trend that you have to participate in. If you’ve got a size of business like David Jones does. So we would be very much a destination,” said Fyfe.

“With the evolution and size of Black Friday, we’ve got to think longer and harder about what December looks like for our customers.”

Tech is the engine

Technology – through the growing sophistication of digital shopping platforms – has played a critical role in driving the proliferation of global shopping events. Major retailers, particularly those that have size, scale and exist both physically and online, will be the biggest beneficiaries of Black Friday, with eBay, Amazon, Kogan, JB Hi-Fi, and Wesfarmers brands like Bunnings and Officeworks among the winners.

Walker estimates Black Friday-generated gross profit is affected by heavy discounting, with numbers slipping 25 to 28 per cent on average, meaning brands and retailers with thinner margins and lacking in scale may not necessarily be profitable during this period.

Constrained consumer spending throughout the year has already resulted in more leftover stock to clear out.

“It has an opportunity cost for many retailers and can have the effect of giving away gross profit that they typically would have captured during Christmas,” he said. “But for many, they can’t afford not to be in it … cashflow is king,” Walker said.

“A 1 per cent drop in margin is a threefold or fourfold increase in volume that’s required.”

The sales event is also being seized by retailers as a chance to enhance customer experience and drum up loyalty. IKEA Australia’s 15 per cent discount will only be available to customers who have signed up to its loyalty program, IKEA Family, while eBay customers who are subscribed to their Plus membership will be granted access to further discounts on products already on sale.

Shoppers are being warned to watch out for Black Friday scams.Credit: Simon Schluter

”Rather than just getting a straight-up discount, consumers need to basically unlock the discounts by answering a trivia question. The answer is basically a code,” said eBay Australia chief marketing officer Rebecca Newton in reference to eBay’s ‘Know Your Thing’ deals that are running alongside its Black Friday sales.

Technology’s more insidious side can also result in emptied bank accounts. Cybersecurity software platforms, retailers, banks and the consumer watchdog alike have been at pains to warn customers about the rise of scams amid the sales frenzy.

Scamwatch data shows November is the most dangerous – and lucrative – month for online shopping scams, with Australians losing $1.2 million last year in this month alone. Customers are urged to watch out for fake websites as the ACCC reports an “alarming increase” in fraudulent virtual shopfronts, particularly among popular fashion or shoe brands.

“A recent, disturbing development is that scammers are paying for their fake websites to appear at the top of your internet search. This means you can’t necessarily trust the first listing you see,” said ACCC deputy chair Catriona Lowe.

Whether Black Friday will continue on its trajectory of consistent growth is not unanimously agreed upon. IKEA Australia hasn’t committed to taking part next year and David Jones will wait and see how consumer sentiment moves.

“This is a market phenomenon where discounting is really what wins in the market. So let’s see where economic headwinds go,” Fyfe said.

Retail industry watchers and online shopping platforms are more positive. “We are just getting started,” said Amazon’s Menzies.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.