Black Friday, the new Christmas for Australian retailers

Australian retail sales grew a healthy 4.2% in October and remain more than 10% above pre-pandemic levels. With most restrictions now behind us, we should expect this weekend’s Black Friday sales weekend to be the largest one ever in Australia. Black Friday, an American creation that has grown in popularity in Australia, has now overtaken Boxing Day as the peak retail event in this country, with November now the largest sales month of the year.

The Australian Retailers Association has estimated consumers will spend upwards of $5 billion across the four-day Black Friday/Cyber Monday weekend. And the deals have started early. Retailers are scrambling to attract the attention of bargain seekers with significant discounts available. Most retail categories will offer tantalising prices compared to normal levels. It’s an opportunity to find early Christmas presents, or just items we’ve perhaps been saving for.

Consumers should take the opportunity to find a bargain, and also to beat the availability shortages expected in December once international supply chain bottlenecks take hold.

Retailers across the world are bracing for the combination of international supply chain shortages and store labour shortages to impact sales levels in the December quarter. Retailers have welcomed the Prime Minister’s decision to re-open the international border to fully-vaccinated students and skilled migrants – key sources of retail labour throughout the busy holiday period.

The supply chain issues confounding large retailers trying to import product from international suppliers may benefit smaller and local retailers. eBay predicts as much, with stock uncertainty likely to drive customers to small businesses.

Black Friday sales will of course drive continued growth in online sales, but the spectre of increasing customer returns is a growing problem for retailers. The high cost of processing returns has led retailers like Walmart and Target (US) to allow customers to keep unwanted products and simply refund the purchase price. Such decisions are based on AI analytics which calculate whether the cost of managing the return would exceed the margin earned on the sale. Other retailers are investing in better CX at the check-out, providing opportunities for customers to try on product or use virtual fitting room technology to ensure the best fit ahead of purchase.

The level of customer returns expected in the New Year has been dubbed “the nightmare after Christmas”, as the costly and manual process of returning unwanted stock to shelves commences. For Australian retailers, the nightmare may extend to the resumption of international travel. We are usually net exporters of travel, spending upwards of $60 billion more overseas than what international tourists spend here. Watch out for a major Australian tourism campaign in the new year to help attract travellers back to Australia.

For now though, let’s focus on Black Friday blasting us to toward a bumper Christmas retail period.