Comment: Black Friday own-goal?

AS WITH the festive turkey, roast potatoes and pudding etc, you can have too much of a good thing, and end up feeling bloated and with plenty of mental cobwebs to blow away in the new year. Using that metaphor, are we just seeing incipient indigestion in the British high street in connection with the imported retailing Stateside phenomenon of Black Friday?

Martin Flanagan

One leading British retailer that thinks so is John Lewis. The department store group’s managing director Andy Street reveals that the group enjoyed its most lucrative week ever – with sales up 22 per cent – in the period at the end of November which included Black Friday, when cut-price offers, particularly in electrical goods, pulled in hordes of shoppers.

The trouble is that the concentration of manic consumer buying on the internet at that time in the past two or three years has steadily cannibalised what used to be a later flurry of sales in the shops near Christmas, and also puts retailers’ back-end operations, such as online deliveries, under severe pressure in a very short period.

Although Black Friday helped John Lewis drive up like-for-like sales nearly 5 per cent in the five weeks to 27 December, the knock-on effect was that sales in its stores declined 1 per cent.

Street says he hopes the transatlantic phenomenon has now reached its peak, and hints that he would like to see it plateau to a more orderly and diverse sales pattern in future festive periods.

The John Lewis boss’s implication is that the heavy discounting characterising Black Friday may be a golden goose, but it is one that comes with bricks-and-mortar sales declines and creates logistical problems for some retailers (if not apparently his own company).

However, he faces a challenge in persuading his fellow UK retailers to show more nerve and hold their prices earlier on and eschew non- electrical promotions.

Many of them are shellshocked after several years of tough trading since the last recession, and are currently in the mood to grab sales wherever they can, in whatever way they can, and ask deeper questions about the longevity and trade-offs for the discounted revenues later.

In addition, department store groups such as John Lewis have a much wider offering than electricals and digital goodies – such as fashion, furniture, homewares and beauty.

That sub-sector therefore finds it easier to avoid putting all its eggs into the Black Friday digital basket than some of its more electronic-centric rivals.

I suspect that the virus is now established on the high street, and will be every bit as strong next Christmas.

Eurozone QE silver bullet may miss target

THE European Central Bank has been late to the government bond-buying, economic pump-priming party trail-blazed by the US and UK.

With interest rates virtually at rock-bottom, the ECB is under increasing pressure to stimulate recovery in the largely stagnant eurozone through other methods. Quantitative easing – particularly with inflation across the Channel extremely low – looks to be a question of when, rather than if.

But an increasing body of economists believe such a move will only improve things at the margins, without altering the grim overall economic picture in the single market. Sobering if the ECB’s last shot in the locker is a relative dud.

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