Black Friday and Cyber Monday Frenzy

  • Dec 03, 2019 AEDT
  • Team Kalkine
Black Friday and Cyber Monday Frenzy

If you nabbed a bargain over the weekend, you weren’t the only one. Australian retailers have received a massive boost from the American-styled, pre-Christmas trading days known as Black Friday and Cyber Monday. According to research published by Finder, 71% of Australians said they were planning to spend in the weekend sales, bringing expected November spending to $3.9 billion. That brings November spending ahead of December for the first time, to the biggest sales month of the year.

Source: freepik.com

A recent consumer study by PayPal found that the Black Friday weekend is presently the third most widespread sales time in the Australian region, following Boxing Day and EOFY sales period. Amazon Australia has already reported that Black Friday was the biggest shopping day in the Aussie branch’s history, and Cyber Monday is expected to have been even larger.

So, what is driving this newfound popularity? And who is being left behind?

Origin Story

For the uninitiated, Black Friday is a seasonal shopping day that has been taking place for decades in the US, on the Friday following Thanksgiving each year. It is a sales event designed to draw savvy shoppers seeking to get an early deal on Christmas shopping, which helps to spread some of the pre-Christmas demand across a wider period, relieving the pressure on retailers and boosting revenue.

Three days after Black Friday, we get Cyber Monday, which is comparatively new. First introduced in the States in 2005, it was initially a marketing strategy to advertise the fledgling online retail sector. Obviously, a lot has changed in the past 15 years. In 2018 online shopping reached 10% of all retail shopping in Australia, with no sign of slowing down. As such, the distinction between the two events is mostly irrelevant these days, and it has become more of a weekend event for both brick and mortar stores and online retailers.

The growth of web sales is also one of the main reasons behind Australia’s adoption of this American tradition.

Black Friday in Australia

In part, Black Friday is just another indication of Globalisation, and the Americanisation of the Australian cultural landscape (which feels like a conversation we’ve only just finished having about a certain holiday taking place on October 31st). The event is featured in sitcoms and movies, in books and magazines - all content that we import heavily from the States. Retailers have of course been quick to take advantage of this, in the same way that they stocked their shelves with Halloween treats all throughout October.

But there’s another reason behind the day’s growing popularity. As little as five years ago most of the Australians had probably never heard of Black Friday, which speaks to a more recent trend than the importation of American pop culture. What changed since then?

Millennials

In the contemporary era, social media forms a huge part of millennials life. With Facebook and Instagram, US businesses have been able to advertise Black Friday sales directly to Australian consumers, particularly millennials. So Australian retailers have been prompted to slash prices in order to maintain customers.

PayPal’s eCommerce report found that 73% of Gen Z delayed purchases to wait for Black Friday sales. It was also higher for Gen Y with 65% delaying purchases, compared with 50% of the general population. There is another factor at play that has grown the popularity of these sales events for younger consumers: buy now, pay later.

In Australia, companies like Afterpay Touch Group Limited (ASX: APT) and ZIP Co Limited (ASX: Z1P) have made big ticket purchases (of the kind of goods that you’re more likely to wait for a sale to buy) more accessible to younger consumers. These relatively new companies have been a huge hit on the ASX in recent years. “Buy now, pay later” services allow individuals to buy consumer goods on interest-free credit, which is paid off in installments, without the necessity of a traditional bank loan or credit card. The product is targeted at, and favoured by, millennials, who are less likely to have the credit score or stable income necessary for more traditional credit schemes.

Local Retailers

Even though it was accepted here with some reluctance, Black Friday has undeniably become a global phenomenon, giving multinationals like Amazon unprecedented opportunity. This has led to mounting pressure on local retailers to match heavily discounted prices offered by their online competitors, a necessity that can scrape narrow margins even closer to the red.

Speaking to a leading publication, Managing Director of the ACRS Rebecca Dare said that, during the time when retail sales were in deterioration and costumers willing to spend were less, the risk of declining profit margins from blanket discounting was real.

The risks are greater given the event’s proximity to Christmas, which can trap firms in a discount spiral throughout December, as they try to compete for Christmas trading expenditure. We’ll have to wait for December’s sales figures to know how they fare.


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