We who have always associated ‘Black Friday’ with Friday the 13th (unlucky for some), were no doubt confused by the retail rallying call of the past week.
According to McCrindle Research, the US concept of Black Friday (the day after Thanksgiving), is gaining traction in Australia. Back in 2017, a McCrindle survey showed that 1 in 4 (24%) of Australians had never heard of Black Friday. Two years on, only 6% of Australians have never heard of Black Friday. This year’s research showed that almost 45% of respondents were going to take advantage of sales and discounts.
In the US, Black Friday (the day after Thanksgiving), is a signal for 100 million Americans to walk off their turkey dinners and go shopping. Americans typically spend more than US$50 billion on this one day.
She Who Researches Before Buying was following me around one of Brisbane’s biggest retail barns on Sunday. The shopping list was (1) a smart TV (2) a portable air conditioner (3) a microwave (4) a vacuum cleaner and (5) an entertainment unit. SWRBB had decided that only item 2 was needed immediately. Things changed once we entered the blissfully chilled domain of a category killer retailer (when I say chilled I refer to the room temperature, not the ambient noise level).
We’d done a bit of research into items 1 and 2, so were quickly persuaded by the price of the short-listed TVs (both $250 below the RRP). Those of you who shop early and often will know that RRP stands for recommended retail price. Since the majority of such items began to emerge from factories in China, very few retailers insist upon RRP. I’m not privy to the wholesale figures, but it’s a fair bet that 30% off something made in China still allows the retailer to make a profit.
This might be a good time to confess that my One And Only (O&O) and I, to borrow a term of endearment from blogger Kathryn Johnston, are the most sales-resistant people outside of hard-core hippies and those with no cash or credit. When we buy big-ticket retail items, the drill is that I produce my credit card and between us we pay the balance off at the end of the month. Did I mention we had earlier bought two ceiling fans from a lighting sales room which cried out ‘while you are here’ ?
Back at the big barn front counter, after resisting attempts to have us upgrade to a five-year warranty, I noticed a sign warning buyers that TVs 55 inches or bigger may not fit into a normal vehicle. Time to tell us now.
After heading to despatch behind the enormous tilt-slab warehouse, we encountered a fit-looking guy who checked out the vehicle. He suggested we move this here and that there and let the back seats down. Between us we got the 55 inch TV into the vehicle, leaning it on the portable air conditioner (itself a substantial package) the two fans, an esky, two folding chairs, a bag of dog crunchies and a yoga mat. Wisely, we left the microwave, entertainment unit and vacuum cleaner for another day, vowing to shop locally.
In relating this rare venture into retail sales, I am more aware than ever that while the car park was full and people were milling about purposefully, the latest studies on consumer confidence suggest the retail sector is in recession. Even the most bullish retailers concede they are unlikely to set new spending records this month. I genuinely wish it were different, as a few people I know work in retail (and a few more that work part-time).
The Westpac-Melbourne Institute Consumer Sentiment Index fell by more than 5% in October to 92.8 points, the lowest reading since July 2015. A reading of 100 sits on the barbed wire fence between optimism and pessimism. Even though the index bounced back (up 45% in November to 97.0), the survey authors say the mood is still downbeat as we enter the Christmas shopping month. Another long-running survey, the ANZ-Roy Morgan Consumer Confidence index, is at a four-year low of 106.8. The index averaged 114.4 this year, down 3.5% from 118.5 in 2018.
The weekly survey also showed a 1.5% drop in the numbers of respondents who thought they were better off at the same time last year.
Australia has its own economic quirks, but it is interesting to note that similar surveys in the US have been on the slide since August.
As the Australian Financial Review’s Sue Mitchell reminded us, Harvey Norman chief executive Katie Paige warned back in August that the government’s tax cuts were unlikely to stimulate retail spending. A concurrent ATO crackdown on individual and business taxpayers prompted small businesses and consumers to keep their heads down (meaning to avoid being involved in something/anything).
Retail sales have been in a trough all year, despite the Reserve Bank’s optimistic forecast of a “gentle turning point” for the economy.
When working as a business writer in the late 1980s and 1990s, I researched retail sales trends, because they often foreshadowed upturns (or downturns) in the economy. The AFR’s Sue Mitchell was specialising in this sector in that era and she’s still there!
So when she tells you retail sales figures have recorded the biggest fall since the 1990-91 recession, you might want to pay attention. Year on year sales growth has slowed from 3.7% in September 2018 to 2.5% in September this year, Mitchell reported. Sales volumes fell 0.1% in the quarter and by 0.2% over the past 12 months.
Super Retail Group chief executive Anthony Heraghty told the AFR the sector was volatile.
“Customers are up and down and you’ll see a couple of good weeks and then a week that’s not so impressive,” Heraghty said. (This might be the right place to disclose that the Cheeseparer Superannuation Fund recently bought shares in Super Retail Group, which owns Rebel, Supercheap Auto, BCF and Macpac.)
The irony for Australian retailers is that the seemingly endless cycle of discount days has created an expectation that the RRP is permanently up for negotiation.
Conservative people who rarely lash out on ‘stuff’ will put their must-buy list aside and wait for the Boxing Day sales. Or the Back to School, Valentine’s Day, Mother’s Day, End of Financial Year, Father’s Day, Singles Day, Click Frenzy, Halloween, Black Friday, Cyber Monday or pre-Christmas sales. Hurry, hurry, all stock must go.
I’ll leave the last word to The Chaser’s 2007 spoof,’ ‘Killer Persian Rug Sale’. This 45-second mock ad was one of many such over the top send-ups of Australia’s fast-talking television retail sales arena.
“Must sell by midnight or die”.
Today’s illustration is by cartoonist Sean Leahy, one of Queensland’s best-known artists.