Viewfrom­dublin: strug­gling­stores­pay­ing­black­fri­dayprice­to­boost­foot­fall

Belfast Telegraph - Business Telegraph - - Economywatch - BY SA­MAN­THA MCCAUGHREN

THE main street is in tur­moil, that we know. In Bri­tain, a num­ber of scalps have al­ready been claimed, in­clud­ing House of Fraser which went into ad­min­is­tra­tion and was then res­cued in part by Sports Di­rect owner Mike Ash­ley.

Many large chains are clos­ing dozens of stores, in­clud­ing New Look and Marks & Spencer. Sev­eral oth­ers have is­sued profit warn­ings.

The UK has its own prob­lems with con­sumer con­fi­dence drop­ping ahead of Brexit, but Ire­land has been left rel­a­tively un­scathed to date.

How­ever, re­tail­ers in both coun­tries face a com­mon prob­lem — the rise of on­line shop­ping. Ir­ish shop­pers have not shifted on­line to the ex­tent of their Bri­tish coun­ter­parts, but they are catch­ing up fast. It is dif­fi­cult to get a read on how the in­ter­na­tional chains are do­ing in Ire­land but, anec­do­tally, the word is that shops are strug­gling.

Lat­est Brown Thomas ac­counts show that turnover was down to €165.7m, a drop of 1.2%.

Ear­lier this month, Marks & Spencer sin­gled out Ire­land for its ‘dif­fi­cult trad­ing’. There may be plenty of signs that the Ir­ish econ­omy is in rude health, but re­tail­ers are still feel­ing the chill.

So is the an­swer to their woes Black Fri­day?

Last week­end Black Fri­day was more ev­i­dent in Ir­ish cities, towns and shop­ping cen­tres than ever be­fore.

What started off as an US craze, fo­cused on elec­tronic goods, has seeped through to fash­ion, beauty, jew­ellery and all the other goods that would be most typ­i­cally be highly sought af­ter for the so­called Christ­mas ‘gift­ing’ pe­riod.

The Bri­tish chains have led the way dis­count­ing model but smaller Ir­ish-owned shops and chains have also jumped on the band­wagon.

Among the Ir­ish stores of­fer­ing money off across most stock are Car­raig Donn, Pamela Scott and Carl Scarpa.

There is some de­bate about how real the dis­counts are. Elec­tron­ics in par­tic­u­lar are dif­fi­cult to judge given that the price of older mod­els al­ways falls as newer ver­sions come on board. There is am­ple ev­i­dence of on­line and bricks and mor­tar shops flog­ging bar­gains that aren’t re­ally bar­gains at all.

Cloth­ing and fash­ion stores have al­ways used dis­counts to bring in shop­pers.

The dif­fer­ence is they used to be avail­able af­ter Christ­mas, af­ter re­tail­ers had en­joyed the shop­ping rush in the pre­ced­ing few weeks.

With Black Fri­day dis­counts, many cloth­ing and gift shops are of­fer­ing 20% or 30% off all stock, so mar­gins are tak­ing a hit at the busiest time of the year.

It def­i­nitely helps boost foot­fall. Ac­cord­ing to PWC, foot­fall on Black Fri­day 2017 was up 30% com­pared to the pre­vi­ous Fri­day. There was an even greater Black Fri­day im­pact in shop­ping cen­tres, where foot­fall was up nearly 40% com­pared to the pre­vi­ous Fri­day.

An­a­lysts, how­ever, are vo­cal in their crit­i­cism of this prac­tice. Richard Hyman, a well-known re­tail ad­viser, told a Bri­tish news­pa­per: “Black Fri­day has prob­a­bly been the most stupid re­tail im­port from the USA this coun­try has ever seen. To launch a pro­mo­tion when you are want­ing, and need­ing, to pro­mote your Christ­mas ranges is very con­fus­ing for cus­tomers.”

Moody’s is­sued a note last week warn­ing that Black Fri­day dis­counts don’t make sense. The credit rat­ing and re­search agency ar­gued that Black Fri­day largely brings for­ward pur­chases from closer to Christ­mas, of­ten at lower mar­gins.

Over­all the event is rarely pos­i­tive for in­di­vid­ual com­pa­nies. David Bea­dle, vice-pres­i­dent and se­nior credit of­fi­cer at Moody’s, said: “Smart re­tail­ers that have cho­sen to par­tic­i­pate do so with a care­fully thought-out strat­egy in­clud­ing spe­cific buy­ing to pro­tect mar­gins.

“Oth­ers have de­cided their over­all prof­itabil­ity and brand val­ues are bet­ter served by avoid­ing in­volve­ment al­to­gether. In time, we be­lieve that the event will be in­creas­ingly about elec­tri­cals and that con­sumers will come to re­alise true bar­gains are rare.”

But it’s a tough call for re­tail­ers.

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