The Christmas lights are on, but few are coming to see them.
That was the scene last week on Oxford Street, London’s leading retail thoroughfare, as non-essential shops in England remained closed. It’s hardly the run-up to Black Friday that retailers had hoped for.
I’ve argued before that Europe is better off without the imported annual shopping frenzy. While door-busting deals are a post-Thanksgiving tradition in the US, there is no place for them on this side of the Atlantic. Discounts at the busiest time of the year just squander profit. European retailers should take 2020 as a sign to finally ditch the gimmick.
UK Black Friday sales are expected to fall 20% from 2019 to 6.2 billion pounds ($8.3 billion), according to PwC, as a combination of shuttered shops, stretched delivery networks, lockdown-weary consumers and stock shortages take their toll.
Although shoppers in continental Europe have been more excited about the shopping holiday over the past couple of years, sales there could also be more subdued. In France, amid an outcry from small stores, big retailers including Amazon.com Inc. and the French department store Galeries Lafayette agreed to postpone their promotions until December 4, when other non-essential retailers are widely expected to open again.
Black Friday started to appear in Europe around a decade ago, as local retailers sought to compete with Amazon. But over the past few years, British chains such as Next Plc, Marks & Spencer Group Plc and Walmart Inc.’s Asda have weaned themselves off the late-November discounting. Now there is some evidence that others are following suit.
According to PwC, some 65%-70% of online retailers in the UK, led by those in the fashion industry, were advertising promotions over the past weekend, compared with the 88% that offered discounts for Black Friday in 2019.
Although markdowns could ramp up over the next few days, there are good reasons for retailers to show restraint.
With the closure of non-essential shops, sales will come almost exclusively from the web. The rapid increase in online ordering has already put enormous strain on the warehouses that fulfill orders and the couriers who deliver them. Retailers will be reluctant to put anything but full-priced stock through the distribution network.
Meanwhile, shuttered stores and fear of not getting gifts in time for Christmas prompted some consumers to do their holiday shopping early. That means that by the time they get to the end of this week, many may well have run out of steam.
Retail chains are also suffering from some supply problems. Because of the first pandemic lockdown, they placed holiday orders later than usual. In the UK, these shipments are only now arriving and they’re colliding with Brexit stockpiles, creating chaos at the major port of Felixstowe. Consequently, some products, such as large electrical appliances manufactured in Europe and toys such as jigsaw puzzles, games and craft kits, are in short supply.
UK toy retailer The Entertainer is still offering its prearranged level of Black Friday deals, which began last Monday, but it has already had to substitute some products it planned to promote because the items were not available.
One area where bargains might still be found is fashion, given that November is the key month for buying Christmas outfits. Demand for items like sequined party dresses has evaporated, which will likely force retailers to mark down their inventories. But even here surplus stocks may not be too big an issue. Clothing retailers were placing smaller orders for coats and cashmere sweaters in March and April, as they took a cautious view about winter buying. Given recent lockdowns, their pessimism turned out to be wise.
Then there is the possibility of a surge in demand, similar to what happened over the summer, if non-essential stores manage to reopen before Christmas. In this case, sales won’t be needed to bring in those customers who didn’t shop early.
That’s yet another reason for European retailers to consign Black Friday to the bargain bin of history once and for all.
Bloomberg
