Why Black Friday is becoming the most wonderful time of the year for retailers

It's the most wonderful time of the year for retailers, and no, it's not Christmas.

Key points:

  • Black Friday and Cyber Monday started in the US but are increasing in popularity in Australia
  • The Australian Retailers Association is tipping $5.4b to be spent over the four-day period
  • Some courier companies have their cut-off for Christmas delivery as early as the first week of December

The Black Friday and Cyber Monday sales events, imported traditions from the US, have been growing in significance for the retail sector over the past few years.

ANZ economists expect this year's sales to set another spending record.

"Black Friday spending last year was actually 50 per cent higher than the year before," ANZ senior economist Adelaide Timbrell says.

"We're not expecting another 50 per cent increase but we do have the perfect storm of no-one having travelled overseas this year, lots of household savings to draw upon and a resilient labour market."

One of the companies at the eye of the storm is online retailer Adore Beauty.

Its Melbourne warehouse was busy throughout the year, despite lockdowns, and chief executive Tennealle O'Shannessy is preparing for a big weekend of orders.

"These online sales events are increasingly important in our calendar," she says.

"We've got over 100 brands participating … so a really big event and lots of energy in the team getting ready for that."

Tennealle O'Shannessy says Adore Beauty works with brands to ensure adequate stock levels before sales events.(ABC News: Kyle Harley)

The Australian Retailers Association (ARA) is tipping $5.4 billion to be spent over the four-day period, from Friday November 26 to Monday November 29.

Is Black Friday the new Boxing Day?

While in Australia there's no Thanksgiving holiday preceding the sales event, it's beginning to overshadow the traditional post-Christmas sales that local retailers have typically focused on.

ANZ analysis of spending at non-food retailers shows Black Friday sales overtook Boxing Day for the first time last year.

And it's not just a one-weekend affair.

"November has now outpaced December as the biggest trading month of the year," ARA boss Paul Zahra says.

ANZ analysis found Black Friday spending overtook Boxing Day for the first time in 2020.(Supplied: ANZ Research)

For retailers such as Adore Beauty, that means ensuring the right stock is on hand to meet demand during the earlier peak period.

"We work very closely with our brand partners, planning for these big events during the year," Ms O'Shannessy says.

It's not all about Christmas, either. Adore expects many of its customers to be treating themselves.

"[Beauty] is a category where people tend to purchase more for self rather than there being a significant gift-giving component."

Once the orders are placed and the products are packed, the next step is delivery.

Different retailers and courier services have varying cut-offs for delivery by Christmas.(ABC News: John Gunn)

Courier company Sendle works primarily with small and medium businesses, and is predicting its Black Friday volumes to nearly double this year.

That would see more parcels shipped this week and next than in any other fortnight in the company's history.

"I think Australians have learned to shop online and retailers are really stepping up to that challenge," says Sendle's chief customer office,r Eva Ross.

Shoppers urged to get in early after a year of disruptions

As Australians have embraced online shopping over the past two years, many have learned the hard way that items did not always arrive as quickly as expected.

But the major challenges for the retail sector during the pandemic could further entrench Black Friday as the most significant pre-Christmas sales period, as people avoid leaving purchases to the last minute.

Delivery delays caused by localised lockdowns and worker strikes, as well as global supply chain disruptions affecting access to stock, have resulted in retailers urging customers to place orders early to avoid disappointment.

Ms Ross says shoppers are hearing the message, according to feedback from Sendle's small business customers.

Sendle's Eva Ross is encouraging customers and retailers to shop and ship early.(ABC News: John Gunn)

A candle company that ships through the courier had already processed more than 50 per cent of the sales they had forecast for the peak period in the first two weeks of November.

"People do know about [the disruptions], so they're ordering earlier and earlier, to make sure their deliveries are arriving on time," Ms Ross says.

"A lot of folks are looking at buying local, knowing that there are those international disruptions."

Shoppers will also need to be mindful of the cut-off dates for delivery by Christmas, which vary between retailers and postal services.

For example, parcels through Sendle need to be sent by December 3 for guaranteed delivery nationally, or by December 13 for delivery within the same city — almost a week earlier than normal.

"We're really recommending that people shop early and ship early to make sure things are under the tree on time," Ms Ross says.

Australia Post has extended its trading hours and has domestic postage cut-off dates of December 8 for Western Australia and the Northern Territory, and December 13 for other states and territories.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.WatchDuration: 3 minutes 22 seconds3m 22s Locked down workers part of 'critical' national infrastructure.(Stephanie Chalmers)Shoppers planning to spend more this year, survey finds

Retailers, economists and couriers aren't alone in forecasting big spending this Black Friday. Shoppers themselves have confirmed their intentions to take advantage of the discounts.

A global survey of more than 7,500 consumers by Boston Consulting Group (BCG) found 82 per cent of Australians plan to spend at Black Friday sales this year, up from 43 per cent last year.

Sales events have increasing significance for online businesses such as Adore Beauty.(ABC News: Kyle Harley)

And BCG partner Simon Murphy says Black Friday still has room to grow among Australian shoppers.

"Globally, Australians have the lowest awareness of Black Friday and Cyber Monday sale events among the surveyed countries,” he says.

"It is really younger Australians who are driving sales over the period. There is, therefore, an opportunity for retailers to better educate and engage pre-millennial Australians and make Black Friday and Cyber Monday even bigger sale events."

The survey found a third of Australians plan to spend more money this year than last, intending to splash an average of $420 over the weekend.

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While interstate and international borders are reopening, giving people who do have cash to spare the option to spend it on travel rather than retail, ANZ senior economist Adelaide Timbrell suspects it's too early to have a major impact.

"International borders will be opened by the time we hit Christmas but there is a planning lag.

"We do still expect to see 2021 as a uniquely strong year for retail."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.WatchDuration: 3 minutes 27 seconds3m 27s Christmas shopping could be extra stressful due to delivery delays and supply shortages.(Rhiana Whitson)Big November a new normal for retail

While this year and last have given retailers a uniquely captive Australian audience, the prominence of Black Friday is tipped to continue.

Ms Timbrell expects travel spending to "take some of the wind out of retail spending" in 2022 but says overseas examples provide reassurance to the sector.

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"What we see in highly vaccinated countries, where they have been able to travel internationally, people are still buying more goods and [fewer] services than before the pandemic," she says.

"That means that, in Australia next year, we're still likely to see people skewing their spending a little bit more to goods and a little bit less to services, a little bit more online and a little bit less in-person than what we're used to in those pre-COVID years.

"That's going to create a stronger Black Friday in 2022 than what we would have seen in, say, 2018 and 2019 but maybe not quite as strong as these very unique lockdown years."

Retailers are offering Black Friday discounts in-store and online.(ABC News: John Gunn)

The way this Black Friday weekend plays out could affect how satisfied customers are with the online shopping experience. The BCG survey found nearly half of Australian shoppers now prefer a mix of online and in-store shopping.

"Timely delivery and availability are expected to be an even greater challenge in 2021," Mr Murphy says.

"Retailers will need to manage website performance, such as page-loading times, in order not to distract and frustrate consumers."

Source: https://www.abc.net.au/news

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