Australians tipped to spend $6.7bn in Black Friday sales bonanza
The Black Friday sales are tipped to trigger a $6.7bn spending spree by consumers, but not all retailers are happy, with some sitting out the shopping blitz.
Dani Pearce made a brave decision when she started her gumboots business Merry People 10 years ago: to not get dragged into the endless cycle of sales and promotions that plagues the sector and ultimately robs retailers of profit as they chase shoppers.
In her words she utterly refused to be a “slave to sales”, including the current Black Friday bonanza where $6.7bn will be poured into retailers.
It now marks a massive spending splurge that eclipses the traditional Boxing Day sales and, despite its American origins, is a permanent fixture on the Australian retail landscape.
“I didn’t come from a retail background, and so for me, I really came at it from a consumer lens and what I really like as a consumer. For me I find it really frustrating when I purchase something full price on then it is on sale two days later,” says Pearce, who grew up on a farm before starting her fashionable but practical gumboots brand that now employs 22 staff with sales in Australia, the US and Britain.
“I think it really devalues the product and the brand. I just thought from the start I’m going to try to not do this. With our product we are selling the same product all the time and I just thought, how is this going to work on sale?” she told The Weekend Australian.
“We actually experience an uplift on Black Friday. I think our pricing is quite fair and we haven’t priced our products to be then marked down. So there has never been a time when I wanted to participate.”
For Harvey Norman chairman Gerry Harvey it’s a similar feeling of unease about the Black Friday sales weekend being so close to Christmas, and mostly serving to further erode profit margins and extend the already long sales marathon well into the new year.
If it were up to the billionaire retailer he’d shut down the whole Black Friday event, but he knows it’s a promotion Harvey Norman just can’t afford to sit out. “If I had my way I’d abolish it,” Harvey tells The Weekend Australian, “because it took away from my Christmas sales a bit and the Boxing Day sales a bit, and I’m always on sale – I don’t want to be always on sale. We have this strange one day of Black Friday sales which is one day we’re on sale – it’s bullshit – and then we are on sale for Christmas and then as soon as that finishes, we’re on sale for Boxing Day.
“So customers love it … if you said to me if I could abolish it, sure I would, but I’m not going to do that.”
And indeed customers do love it. The Australian Retailers Association predicts that $6.7bn will be spent this year for the Black Friday/Cyber Monday sales weekend, up 5.5 per cent on last year and fuelled by one-third of Australians doing their Christmas shopping in November, making it the biggest shopping month of the year.
That shopping spree is also starting earlier, with what Westpac head of Australian macro-forecasting Matthew Hassan calls “sales creep”: credit card spending gathers pace weeks before Black Friday, according to the Westpac credit card tracker.
“Traditionally a four-day event starting on the final Friday of November, it looks to have kicked off early this year with a positive impact on card activity already evident,” Hassan says. “Card activity across retail segments rose 1.9 per cent over the last fortnight, with notable gains across clothing, department and discount stores, all up by over 7 per cent, over and above usual seasonal variations.”
The earlier arrival of Black Friday sales comes as cost-of-living pressures rein in consumer spending, with the sales event attracting shoppers looking for bargains – some retailers are slashing prices by more than 70 per cent.
“We are seeing sales creep, and it is obviously a mark of the difficult year that retailers have had and that most retailers are pretty eager to get traffic going,” he says.
Hassan says Westpac credit card data back in 2018 shows the Black Friday sales barely registered, but they have become a dominant sales event that is dragging in early Christmas sales and overshadowing Boxing Day sales.
“You can look at weekly activity and pick out the different (retail) categories for what was the biggest turnover week for the year and back in 2018 Black Friday didn’t feature for any category. Super Saturday before Christmas was the one. But now roll ahead to 2023 and it (Black Friday) was the peak week for half a dozen different categories. We are seeing department stores, clothing, electrical and appliances – they are all their biggest sales periods.”
Australian Retailers Association chief industry affairs officer Fleur Brown says that there is eager anticipation among retailers as they race to the end of year finish line, with the peak season trading period between now and the new year essential for retailers – many make up to two-thirds of their annual profits at this time.
“And of course, a lot of Australians are now looking to Black Friday for Christmas purchases, in this economy in particular. So that gives Black Friday more significance, because there will be a good chunk of that ‘Christmas spend’ in there, and we think it’s important to participate for that reason.
“There is a lot of buzz around Black Friday – it is a real driver of Christmas purchases.”
Department store Myer is one of the many retailers going ‘‘all in’’ for Black Friday sales, both within its stores and online, and it knows it can’t afford to sit out the sales bonanza.
“Black Friday at Myer is the ultimate shopping event, offering outstanding deals across every category, just in time for the festive season,” says Myer chief customer officer Geoff Ikin.
“At Myer, we expect Black Friday to be the biggest shopping event of the year, with more customers taking advantage of early access to savings and incredible offers across every category. It’s become a key moment for customers to secure great deals on gifts, household essentials and personal treats. We anticipate strong engagement both in-store and online as shoppers get ahead on their festive season preparations.
“Shoppers have become more strategic and proactive during Black Friday, with many planning their purchases in advance to make the most of the deals. We’ve also seen an increase in customers using loyalty points through programs like Myer One or pay-with-points partnerships, such as Commbank, Virgin, and Amex, to maximise their savings. Customers are shopping across multiple categories, from gifting, beauty and fashion to homewares, with a strong focus on value.”
There’s always a downside to this type of retail strategy, namely the sacrifice of profit margin for sales volumes.
“It’s a little bit less clear cut about what it means for retailers’ bottom line,” says Hassan.
“The fourth quarter for most of the non-food retail businesses is really important as this is when they’ll make 35 per cent to 40 per cent of their profit for the year and it’s because of the combination of strong turnover, but also quite good margins.
“Now, obviously, if you’re going to discount aggressively, you’re not going to get the same sort of margin. So for retailers, they’re in this tricky business if they want to generate a lot of traffic, they’ve got this great sales window they can target, but they’re having to really be very careful around pricing so that their bottom line sees the maximum benefit.”
Hassan says Black Friday is about winning customers to your brand, as much as it is about the sales.
“More generally, you come for the Black Friday sales and you stay for other things. That is why we are seeing strategies of offering greater discounts if you sign on or register for regular updates, if you become part of the system for retailers – to get that referral and then down the line get the repeat business that really makes it pay off,” he says.
At Pearce’s gumboots company the ability to stand apart from the Black Friday sales, as well as all other sales through the year, means her business can better forecast demand, which has huge financial benefits in terms of minimising inventory and waste.
“Obviously growing a global business sometimes you might get it (forecasts) wrong in terms of what you order. I do have a really great merchandise planner who I work really closely with, and because of my strategic goals around not going on sale, she has to be a lot more conservative than what she would have been in other roles around ordering.
“We have a lot more conversations about ordering and intention of the product, and I think it puts some really great constraints on my team … I think it’s also created some good discipline on the team about how we work.
“And it’s not like, oh, well, we’ve got it wrong, lets put it on sale; it is about let’s work harder, what other marketing strategies can we come up with, what else can we do to help push this along faster and not just be looking at product launches and when the next thing is happening.”
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