Retailers are counting on Black Friday to save Christmas, but the latest rate rise could dent confidence and force retailers to discount more deeply.
, lifting retailers’ spirits in the run-up to the festive season, the RBA raised the official cash rate for the first time in four months to the highest rate in 12 years.was widely expected, but the timing could hardly have been worse, coming 16 days before Black Friday/Cyber Monday promotions, when consumers were expected to take advantage of widespread discounting to buy Christmas gifts.“I don’t think anyone will be cancelling Christmas.
Australian Retailers Association chief executive Paul Zahra says most variable rate mortgage holders won’t have to start paying more for another two or three months, but the rate rise will affect their confidence and hence their willingness to spend. According to an ARA/Roy Morgan survey, 30 per cent of shoppers plan to cut their Christmas gifting budgets, while 61 per cent plan to maintain last year’s spending and 9 per cent intend to spend more.“Black Friday will still be strong because the customer is really budget-conscious, purpose-driven, shopping earlier than they ever have before, and they’re looking for a deal,” Zahra told Window Shopping.
Black Friday started to gain traction in Australia in 2017 and within three years had surpassed Boxing Day as the biggest retail spending event for the year.It’s enthusiastically embraced by retailers and consumers. According to data from Honeycomb Strategy, 65 per cent of Australians are planning to shop the Black Friday sales this year and almost 50 per cent plan to use Black Friday and Cyber Monday deals to do their Christmas shopping.
Michelle Grujin, vice president for consumer products and retail at Capgemini Invent, believes the Black Friday promotion will be even more important to retailers this year as budget-constrained shoppers hunt for value. According to Macquarie data, discretionary retail spending 10 weeks out from Christmas is trading in line with that in 2022, but is below levels in 2019, 2020 and 2021.
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