This week Australian retailers of all varieties are offering Black Friday discounts, but the growing popularity of the sale, which originated in the US, has created new competitive pressures for local retailers.

The drive for these types of sale events came originally from the retailer according to David White, national leader, retail, wholesale & distribution at Deloitte. But the increasing interest in Black Friday and Cyber Monday has meant that there is now very strong demand from the consumer for discounts. 

The weekend of sales, which coincides with the Thanksgiving, has become a part of Australia’s holiday shopping calendar, so much so that the two days last year were the biggest online shopping event on record growing 29 per cent year-on-year, according to Australia Post. 

While this represents a great opportunity for retailers, White warns there remains a risk that if they get their strategy wrong. 

“The consequences of this is that it’s made more retailers feel the need to participate in flash sales events so that they meet customer expectations and also don’t lose out on sales to competitors,” White told Which-50. 

“Selling the wrong product at the wrong price – it could have a negative impact on their Christmas prospects. However, increasingly retailers have little choice but to participate and develop a winning strategy around Black Friday which boosts overall sales and increases customer engagement.”

Over the past years, White said there has been an increase in both the volume of sales and number of participants (both retailer and customer) in Australia, following the trend in international markets. 

“The increased investment in digital and online offerings by Australian retailers has been a key element in accelerating the growth of Black Friday, with much improved digital platforms and product availability. 

“Australian consumers have responded very positively to this, with Black Friday sales set to hit record levels again this year and we expect this trend to continue.”

The downside to Black Friday

Retailers are also investing in significant marketing expenditure and products to help drive Black Friday sales, says the latest findings in the Deloitte Retailers Christmas Survey

White noted only 28 per cent of respondents said Black Friday and similar flash sale events have a positive impact on their overall sales. 

He said a growing number of Australian retailers are not seeing a boost in overall sales for the year – rather Black Friday is simply bringing forward Christmas sales to November. 

“And so retailers need to think very carefully on how they plan to participate in Black Friday to avoid cannibalising Christmas sales and margins.

“But with so many consumers expecting to pick up a bargain on Black Friday it’s hard for retailers to opt out of participating. Increasingly we are seeing retailers buy-in specific inventory to sell for Black Friday to satisfy this consumer demand but without impacting sales across the rest of their business,” he adds. 

These Black Friday sales are changing the ways consumers shop leading up to Christmas. Consumer behaviour has steadily changed in recent years according to Dominique Lamb, CEO of the National Retail Association. 

“If the demand (for the sales) wasn’t there, then retailers wouldn’t place too much emphasis on Black Friday or Cyber Monday,” Lamb said. 

“By late November, shoppers are turning their attention to Christmas shopping and sales events such as Black Friday and Cyber Monday allow them to get present shopping out of the way and at bargain prices.”

The National Retail Association forecasts shoppers will spend an average of $54,347 per minute in online sales alone throughout the Christmas trade period, encompassing the second-half of November and all of December. 

“The total digital spend will also reach $3.6 billion over the six weeks,” she said.

Trends for 2019

Shane Broughton, head of Shopify Plus APAC, said “The competition during this sales holiday is intense, pushing brands to create more sales, kick sales off earlier and have them last longer in order to get a leg up.”

However, consumers are now expecting sales to get better every year. Broughton said customers are no longer just focused on finding the best discounts and promotions. 

“Consumers are looking for more choice and expectations around a quality shopping experience are high.

“These expectations are driving brands to not just focus on offering the best sales, but to personalise the shopping experience for their customers, leaning into loyalty discount codes, product recommendations, VIP experiences and more,” he said.

This year, Australians are looking to support more independent businesses according to Broughton. 

They will also be planning to buy directly from the brands they love instead of through third-party retailers. 

He said consumers will be shopping more online than instore, “We wouldn’t be surprised if across the industry mobile sales finally surpassed desktop sales.”

“Another interesting trend we’re seeing is the importance personalisation and social responsibility play in consumer purchasing decisions, especially during Black Friday & Cyber Monday. 

“Consumers are looking for brands to offer customised shopping experiences, both online and in-store, and plan to prioritise their shopping at stores that have demonstrated that they are socially responsible.”

LinkedIn
Previous post

We're Better Than This Part I: Why We Need Industry Reform

Next post

Digital ad spend up 6.5 per cent: IAB Australia

Join the digital transformation discussion and sign up for the Which-50 Irregular Insights newsletter.