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Back in black: Friday sales tipped to shatter records as consumers itching to spend

Business

With the pandemic closing international borders, hospitality only just opening up in some states, and fiscal stimulus pumping more cash into people’s pocket, Black Friday sales this year are expected to break records.

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Australia might not be at the point of store stampedes like the United States, but Black Friday sales this year are expected to be the biggest ever.

The American shopping holiday, which coincides with Thanksgiving in the US, has been growing and starting earlier in Australia over the past few years.

Last year, Black Friday sales increased 0.9 per cent to a record $27.9 billion, and a stronger result is expected this year.

Promotions for Black Friday pre-sales have been landing in inboxes for at least the past week in the lead-up to official sales beginning today.

IBISWorld senior analyst Arthur Kyriakopoulos predicted retailers are likely to benefit from a surge in consumer spending this weekend.

“The dramatic rise in social assistance payments, the projected elimination of COVID-19 in Victoria and a positive outlook for COVID-19 vaccinations have culminated in a stunning improvement in the consumer sentiment index, to 107.5 points this month,” Kyriakopoulos said.

With Australians unable to travel for the majority of 2020 and with hospitality venues closed for much of the year, Mr Kyriakopoulos said consumers were likely to splurge more than usual on Black Friday sales.

Shoppers set to ‘unleash their wallets’

Ryan Gracie, chief marketing officer for Catch Group, said the past few years had seen retailers rolling out Black Friday sales earlier and earlier.

“It feels like it’s come from nowhere. Three or four years ago [Black Friday] was on the radar but it was nowhere near the supreme shopping event it is now on the shopping calendar,” he said.

“Consumers are poking around to see what deals are available and will unleash their wallets in the next few days.”

Gracie said Australian shoppers were expecting bigger and better sales “year in year out”.

“We are offering four times as many deals this year compared to previous years. We’ve certainly upped our game because our buyers know it’s a huge opportunity to get their goods in front of an audience,” he said.

Gracie said it wasn’t that people had more money to spend, but they were saving for longer in order to spend the money they had during the Christmas period.

Last year, Black Friday was the biggest sales day for the year for Catch. Gracie expects that to be beaten “by a mile” today.

“COVID made people shop online and it has changed people’s behaviour … they are shopping more online because of the habit that’s been formed,” Gracie said.

“That transition to online has been brought forward by many, many years. That habit formation that people haven’t tapped into before has become part of their lives.

“A courier turning up on your doorstep isn’t a novelty anymore, it’s expected.”

Peter Lipinski, chief executive of Aramex Australia (formerly Fastway Couriers) told the ABC he was expecting parcel volumes to be 40 per cent higher in the lead-up to Christmas compared with last year.

“We’ve already seen them spike this week, we are already 15 per cent up on last week and last week was high too,” he said.

Australia Post saw parcel volumes grow 72 per cent between March to August this year, and 101 per cent in Victoria.

To help with a surge in parcels predicted to hit post offices from now until Christmas, AusPost has hired more than 5,000 people, put 3,000 new vehicles on the road and chartered 18 air freighters to help manage unprecedented volumes.

Lipinski said more and more Australian retailers were beginning their Christmas sales on Black Friday weekend, and not just in metropolitan areas but regional corners of the country too.

“People are buying everywhere,” he said.

Flatpack furniture was again topping sales after an initial surge at the beginning of the pandemic when people were stuck at home.

“Pre-Christmas wine sales are growing, electronics and clothes, the typical things people buy for Christmas gifts,” Lipinski said.

“The growth in online shopping is typically 15 per cent year-on-year, but this year it was 40 per cent and that was mainly driven by lockdown.”

Black Friday no longer just for big box retailers

Gordana Redzovski, vice-president of retail analytics company Vend, said the proliferation of online shopping meant Black Friday was no longer just for big box retailers.

“Local Australian retailers have identified that it’s an event that they can capitalise on too,” Redzovski said.

Data from Vend showed from 2016 to 2019, revenue at local retailers on Black Friday almost doubled.

“There’s an incredibly strong sentiment for supporting local businesses in Australia, and with many of them still regaining their footing after 2020’s challenges, we expect that support to translate to strong trade for local retailers,” Ms Redzovski said.

Chief executive of the Australian Retailers Association Paul Zahra said he was predicting an almost 3 per cent increase in sales from mid-November to the end of December.

“That is quite remarkable considering the outlook mid-pandemic and testament to the staying power of Australian retail and the strength of the government stimulus response,” Zahra said.

“Many retailers make almost two-thirds of their annual profit over these next three months, so they are relying on a big boost from this period as we build up towards Christmas.”

Sales boost could be short-lived

Kyriakopoulos from IBISWorld also warned retailers to be wary of a downturn in customer spending next year as JobKeeper and JobSeeker payments are wound back and other services begin to open up.

“Consumers have had additional capacity to spend on retail goods following the curtailment of service-based industries, such as the pubs, bars and nightclubs industry.”

Kyriakopoulos said stimulus measures this year had “masked the true effect of COVID-19”.

“As that stimulus is removed next year the economy will once again need to stand on its own feet,” he said.

“However, relative to the rest of the world, Australia’s success at containing the COVID-19 outbreak is likely to spur a faster recovery in retail spending.”

– ABC / Rachel Clayton

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