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Black Friday Bonanza Ahead Of New Year Price Hikes

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Black Friday sales this year are likely to top £2bn say analysts, as shoppers hunt for bargains ahead of an expected rise in prices in 2017.

The fall in the value of the pound is forecast to push up the prices of imported goods next year.

Black Friday sales last year were about £1.9bn, but retailers are now stretching the one-day shopping extravaganza over several days.

Amazon and some supermarkets started their sales up to 10 days ago.

By Thursday, the discount retailing site TopCashback reported a 30% increase in spending over last year.

While more than £2bn is expected to be spent on Friday alone, the total for the next four days is forecast to rise to more than £4bn once the weekend and Cyber-Monday – an online only event – are included in the numbers.

But increasingly, Black Friday too is becoming an internet bonanza. According to the online retailing association IMRG, well over half the spend on Black Friday will be done online.

Last chance

However, it could be a last chance to grab a bargain ahead of expected price rises in 2017. The cost of imported items are forecast to rise, as the fall in the value of the pound after the EU referendum in June finally feeds through into retail prices.

AO World chief executive John Roberts said: “Obviously, with the Brexit currency movements, prices are going to go up in the first quarter of next year. The vast majority of all Black Friday offers were negotiated and in place before [the] Brexit [vote].”

Argos boss John Rogers said he “can’t rule out price increases” next year because of the falling pound.

Retailer Next said that it had managed its currency exposure so that it could keep prices down until January. It said in a statement: “Although it is very early in the buying cycle, we currently estimate that cost prices in 2017/18 will rise by less than 5% on like-for-like products.”

Consultancy group PwC estimated that one-in-four UK adults in the country will spend on average £203 this Black Friday.

Black Friday refuseniks

Even so, Paul Martin, PwC’s UK Head of Retail said: “For retailers, it has always been questionable whether Black Friday really benefits them in the long-run, and in the current environment of rising costs and squeezed margins – perhaps it’s even more so.”

Asda opted out of Black Friday in 2015 and again this year following chaotic scenes among bargain-crazed customers in 2014. Next, Ikea and fashion chain Jigsaw have also declared themselves Black Friday refuseniks.

Deception

Jigsaw chief executive Peter Ruis called it “a complete and utter deception.” He said: “In fashion over 50%-60% of Black Friday purchases are returned. It stays in the supply chain two or three weeks, churns around and everyone’s lost the chance to sell it, and it just goes straight into the sale at 50-60% off.

“It’s a double whammy: loss of profit, loss of margin, and that product just sitting around in supply chains.”

However, Mike France, co-founder of Christopher Ward, a premium watch retailer, writing in the Retail Gazette, said: “Breaking ranks with the phenomenon in isolation is both risky and potentially dangerous to a brand – as Asda found out to its detriment last year.

“The reality is that swimming against such a forceful current will see you miss out on what has become the new peak.”- BBC/MALAYSIA DIGEST

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