Business

Black Friday sales serve only to erode Irish retail margins

Gearing up to splurge – they don’t need any stimulation

Black Friday sales at Macy’s in New York: Post-Thanksgiving US sales are unnecessary here and only cannibalise revenues. Photograph: Stephanie Keith/Reuters

Tue Nov 27 2018 - 01:31

The enthusiasm with which Irish retailers have embraced the US idea of offering heavily-discounted shopping on Black Friday and Cyber Monday looks increasingly misplaced and bears the hallmark of a self-inflicted wound.

There is no need for Irish retailers to offer steep discounts to tempt shoppers into stores or online barely a month before Christmas. Consumers are already gearing up to splurge – they don’t need any stimulation. Black Friday and Cyber Monday serve only to cannibalise revenues.

But now that they have jumped upon this destructive, margin-eroding annual carousel of unnecessary price cuts, how can Irish retailers get off?

There was always a solid rationale behind Black Friday, and its Cyber Monday cousin, in the US. But only in the US.

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Black Friday falls on the day after Thanksgiving, which always falls on the last Thursday in November. Without Black Friday, most US consumers would probably just spend the day lying prone on their sofas, groaning from all the turkey and booze-fuelled excess of the previous day.

A setpiece day of massive shopping discounts, on a day when many Americans are at a loose end anyway, is a sensible incentive to get US shoppers out of the house and into stores, kickstarting the holiday shopping season.

But there is no Thanksgiving in Ireland. None of us spent Friday still suffering the effects of the previous day’s food coma and in need of heavily-incentivised retail therapy to get us off the couch.

‘Credit negative’

Ratings agency Moody’s warned last week that Black Friday was “credit negative” for the European retail sector and is “rarely positive” for individual stores.

Meanwhile, Retail Ireland, a division of Ibec, warned that Irish consumers now expect discounts of up to 50 per cent on these days and is concerned about the effect this could have on margins.

Irish retailer’s now face a Hobson’s choice: stay on the Black Friday/Cyber Monday carousel and throw a grenade into your operating margins, or quit but watch your market share on those days migrate to competitors still offering discounts.

It is a quandary all of their own making.

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