Why we fell for America’s Black Friday sales
Sam Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal land. Just a reminder before we get into today’s episode, we have a listener survey running at the moment because we want to hear from you about how you’re finding the podcast. It’s anonymous and quick to fill out and you can find the link in our show notes or on our website. Now for ABC News Daily. You might have noticed the sales are on again. The Americans may have come up with the Black Friday frenzy, but Australians are embracing it more and more. It’s bigger now than the Boxing Day sales. Today, business reporter Nassim Khadem on how much we’re really going to spend during a cost of living crisis and what that might mean for our inflation problem. Nassim, we’re in a cost of living crisis. Inflation is high and the Reserve Bank is really almost pleading with us to stop spending, but Christmas is coming and this week kicks off the Black Friday sales. Exciting times.
Nassim Khadem: That’s right. I’ve made a shopping list. I’m hoping to get a TV, which I’ve been holding out all year for, but I’ll only buy one if I get a really good bargain.
Sam Hawley: Yeah. I want a barbecue, but my problem, Nassim, is every time sales come on, I always pick the things that aren’t on sale. I don’t know what it is about me. Anyway, this is a good time for retailers, isn’t it?
Nassim Khadem: Yes. Black Friday is now Australia’s biggest trading period. So research from the Australian Retailers Association and Roy Morgan predicts that shoppers will spend $6.36 billion across the Black Friday to Cyber Monday weekend. That’s about a quarter of our Christmas shopping that happens during this sales period and that figure is a record. There’s also a Finder survey of more than 1,000 people. It found that almost one in three Aussies are planning to take part in the Black Friday sales.
Sam Hawley: Yeah. All right. Just tell me, how on earth did we get here? Because this is an American tradition. It comes the day after Thanksgiving, so it has huge significance for Americans, but actually not that much for Australians. So why are we even doing this?
Nassim Khadem: That’s right. Black Friday is the day after American Thanksgiving, a holiday that falls on the fourth Thursday in November. It’s long been a huge event in the United States. There’s some debate about the day being named Black Friday. It’s said to have come from a Wall Street term for a bad overspend, but also it can refer to the fact that it’s a day when people skip work for an extra long weekend or it’s when roads were gridlocked in America as they drove home after the holidays. And let’s not forget, it’s also got a dark side. So shoppers have died among the mania of the sales in years gone by. There’s been shootings and stabbings in malls in the US, and people have even been trampled on in the mad rush to get into stores. But anyway, since the 1960s, it’s been used to refer to the shopping frenzy the day after Thanksgiving, and black can refer to profits for retail as being in the black. Obviously in Australia, the term has some history referring to the 1939 Victorian bushfires, and we’ve since had Black Saturday and Black Summer. So it’s somewhat of an awkward export for us.
Sam Hawley: Yeah, it’s not a great name for us. We should think about changing that perhaps. So why, Nassim, are we embracing this so much? We’ve sort of done this with Halloween too, right? It’s this kind of Americanisms that creep in to Australia. So why are we actually embracing it? We seem to love it.
Nassim Khadem: Yeah, so it’s only come to Australia in the past decade. It was really because of the rise in international online shopping sites. So Australian retailers were seeing US online stores such as Apple holding sales, and they needed to compete locally. And it was really solidified here with the launch of Amazon Australia in 2017. It wasn’t always called Black Friday here. Harvey Norman has called it Big Friday in the past. Priceline’s called it Pink Friday. But now most retailers advertise Black Friday sales.
Sam Hawley: Yeah, all right. Well, I’ve been feeling a little under pressure actually at the moment that I need to do my Christmas shopping because everything’s on sale, but I actually don’t know what I’m meant to be buying yet. So I’m in this kind of, oh my gosh, what should I do? And it’s all online, isn’t it? So every time I sort of open my computer, I’m reminded, oh, don’t forget that the sales are on.
Nassim Khadem: That’s definitely a big part of it. And certainly the online aspect of the sales periods ballooned with the creation of Cyber Monday. So this is the Monday after Black Friday. And this year it falls on the 27th of November, which is the online shopping equivalent to Black Friday. Cyber Monday first came to Australia in 2012 when local online retailers held a click frenzy and that led to many websites crashing.
Sam Hawley: So just let’s go back to that issue of the cost of living crisis, because really with rising interest rates and all those rate rises that we’ve had, you’d think people would be spending less. So do they really have the money to throw around during these sales?
Nassim Khadem: Well, people have been spending less according to the Commonwealth Bank’s household spending index, which fell 1% in October. Australians are cutting back on discretionary spending such as eating out and airfares. And a survey by Westpac found that 40% of respondents were planning to spend less on Christmas gifts this year. Westpac senior economist, Matthew Hassan, has tipped it will be a penny-pinching Christmas.
Matthew Hassan, senior economist, Westpac: When we look at the detail, no surprises. It’s again the mortgage belt that’s looking to pare back spending. I think the thing to bear in mind here is that this planned reduction in Christmas spending is against a backdrop of high inflation. Prices for goods, toys and accessories and so on are up about 8% on a year ago. So to try and trim spending when prices are rising like that is a pretty hard task.
Nassim Khadem: And the Australian Retailers Association boss, Paul Zahra, says the average spend over the holidays will drop.
Paul Zahra, CEO, Australia Retailers Association: So we’re seeing a softening of retail sales generally across the board in discretionary spend, particularly in household goods, clothing, personal accessories. The only category that is performing right now is essentials like food.
Nassim Khadem: So shoppers will definitely be focused on how much they’re spending and when they spend it. Like you and I, Sam, people have been holding out for a bargain. And despite the tumultuous economic outlook, this Black Friday is expected to be bigger than ever. As I’ve said, that $6 billion figure is up 3% from last year. So that means people are spending more during Black Friday sales, but not much more in general, suggesting that they are really looking and holding out for these big discounts.
Sam Hawley: Yeah, all right. Well it’s a lot of money, $6 billion in a pretty short period of time, Nassim. What does it mean when that huge amount of money is pumped into the economy? What happens?
Nassim Khadem: Well last year we saw big spending during Black Friday sales and then November’s inflation rate was 7.3%. It was a 32-year high and almost three times the pace of wage growth at the time. The record rate at the time was driven by the rising cost of transport, home building and food and beverage. But commentators also suggested that that last year Black Friday to Cyber Monday sales period broke records because people were trying to get deals before prices went up even more. And that is, you know, the threat of inflation had them spending bigger than ever. But Matthew Hassan, who is, as I’ve said, an economist at Westpac, says the sales won’t impact inflation because overall Christmas spending will be softer.
Matthew Hassan, senior economist, Westpac: One of the things consumers are looking to do this year is to make their money go further. And the Black Friday and Cyber Week sales are really the opportunity to really take advantage of significant discounts. So if you’re planning to try and cut back on spending for Christmas in general, it’s probably a good idea to hit the discounts and hit the sales period harder. And I think we’ll be looking for is how spending tracks post the Black Friday, Cyber Week sales period. You know, last year we saw quite a sharp drop off in spending in that post-discount period in the lead into Christmas. And we may be looking for something similar this year.
Sam Hawley: Mm. All right. So tell me, Nassim, it’s growing into a big thing in Australia now, Black Friday, Cyber Monday. So how important is it for Australian businesses here to actually take part in this?
Nassim Khadem: It’s become a hugely important period for both big and small retailers. So Boxing Day used to be the premier retail event of the year, but Black Friday’s taken over. So local retailers really count on sales during this period more than sales after December 26. Although that will still be important to them. That said, there is a tiny portion of retailers around the world who purposely opt out of sales because they say they value loyal repeat customers over bargain shoppers or because they believe they’re taking a stand against what they say is rampant consumerism and its carbon footprint.
Sam Hawley: Mm. All right. Well, it looks like we’re going to have a big weekend of shopping. But I guess the risk is, Nassim, that we could be sucked into buying things we don’t actually need. That happens to me a fair bit. And I mean, are we really benefiting from this?
Nassim Khadem: Yeah, well, it depends. I mean, if you really do only buy what you need, what you’ve been waiting for, then you’re getting it at a lower price and that’s great. But the frenzy of sales is designed to make people spend more. You know, companies exploit this fear of missing out by using specific marketing tactics to pull consumers in, such as setting limitations on stock to make their products appear to be in short supply, having countdown timers stating how many consumers are currently browsing the listing. And if you’re paying for shipping anyway, it’s really tempting to throw a few extra things in the basket. I actually did this last night when I had to spend over $50 to get a free delivery for some small items I’d purchased. So consumer groups are really urging people to really compare the deals on offer, which is pretty easy to do online. And shoppers should also really watch out for fake retail websites that take advantage of the frenzy with the consumer watchdog, the ACCC, warning of a spike in scam websites.
Catriona Lower, deputy chair, ACCC: Scammers are using what really are pretty good fakes to encourage consumers with too good to be true bargains. And often what we’re finding is either when the goods arrive, they’re cheap knock-offs or the goods don’t arrive at all. And of course, consumers have lost their money.
Nassim Khadem: And people also need to ensure that they’re shopping in the right currency so that they don’t get hit by international transaction fees. So if you set a budget and you stick to it, then that can be a smart way to shop. But you know, companies are going to use all the tricks in the book to try to get you to spend more.
Sam Hawley: Yeah, all right. Well, some good tips there. And I definitely don’t need an air fryer, Nassim. I don’t need it.
Nassim Khadem: But will you be tempted to buy it anyway, Sam?
Sam Hawley: There’s the potential for that. Happy shopping, Nassim.
Nassim Khadem: And to you.
Sam Hawley: Nassim Khadem is a business reporter with the ABC based in Melbourne. This episode was produced by Bridget Fitzgerald, Nell Whitehead, Anna John and Sam Dunn, who also did the mix. Our supervising producer is David Coady. To get in touch with the team, email us on [email protected]. And don’t forget to fill out our listener survey, which is in the show notes and on our website. Thanks for listening.
