UK retailers look to Black Friday to kick start Christmas sales

A worker uses a forklift truck to move “Black Friday” labelled goods inside an Amazon.co.uk fulfillment center in Peterborough. Consumer spending — the engine of British economic growth — is being squeezed as inflation rises and wage growth falters, and as shoppers worry about the potential impact of Brexit. (AFP)
Updated 21 November 2017
0

UK retailers look to Black Friday to kick start Christmas sales

LONDON: After suffering their biggest decline in sales volumes for four-and-a-half years in October, British retailers are pinning their hopes on Black Friday discounts to get shoppers spending again.
The annual promotional event was imported from the US into Britain by Amazon in 2010 and has got bigger every year, even if — after chaos and scuffles in stores in 2014 — it has returned to being a mainly online affair.
Research firm GlobalData forecasts UK spending during the Black Friday period — defined as Monday November 20 to Monday November 27 — will grow 3.8 percent year-on-year to £10.1 billion (SR50.17 billion), or about 10.4 percent of their total estimate for the last three months of the year.
“We expect more retailers to take part this year in an attempt to stimulate the waning demand they have faced over September and October,” said GlobalData’s Eleanor Parr.
Consumer spending — the engine of British economic growth — is being squeezed as inflation rises and wage growth falters, and as shoppers worry about the potential impact of Brexit.
Earlier this month, the Bank of England added to the pressure by raising borrowing costs for the first time in a decade. Last week, official data showed UK retail sales volumes fell 0.3 percent year-on-year in October, though the numbers were distorted by a strong October last year.
Black Friday, the day after the US Thanksgiving holiday, was so named because spending would surge and retailers would traditionally begin to turn a profit for the year, moving from the red into the black. It falls on November 24 this year.
Its popularity has meant Britain’s Christmas trading season now has three peaks — around Black Friday, the week up to December 25 and the post-Christmas sales.
Like last year, retailers including Amazon, Dixons Carphone and Sainsbury’s Argos are stretching promotions over one to two weeks, hoping to smooth out demand and reduce pressure on supply and distribution networks.
However, analysts say a drop in sterling since Britain’s 2016 vote to leave the European Union has driven up import costs for retailers, squeezing their margins and meaning they may not be able to offer the scale of discounts seen last year.
Shoppers are likely to be checking prices carefully too, with several consumer groups warning some Black Friday deals are no better than other sales during the year.
Among retailers, Black Friday still divides opinion.
Supporters argue carefully planned, targeted promotions with global suppliers allow them to achieve a sales boost while still maintaining profit margins.
But critics say the discounts suck forward Christmas sales that retailers would otherwise have made at full price and can dampen business in subsequent weeks.
“I bet most retailers wish it was an American import that never arrived,” Steve Rowe, Marks & Spencer’s chief executive, told reporters this month.
M&S will not be participating this year.


Gulf exporters to reap oil dividend as battle for Asia market share heats up

Updated 28 min 30 sec ago
0

Gulf exporters to reap oil dividend as battle for Asia market share heats up

  • Chinese exports to US fall
  • IEA ups demand forecast

LONDON: China is expected to buy more oil from Saudi Arabia and other Gulf producers as it seeks to replace US supply amid a worsening trade war with Washington.
Although China last week omitted US crude from a list of a retaliatory tariffs, analysts told Arab News that the Chinese were cutting forward orders for US oil in case the trade war escalates.
Richard Mallinson, co-founder of London consultancy Energy Aspects, said: “Chinese buyers, anticipating that crude and LNG could go on the list if tensions escalate further, are looking to alternative sources.”
Mallinson said that Chinese buyers wanted to avoid having significant amounts of US oil sitting on tankers in the middle of the ocean, which would be hit with tariffs when unloaded at Chinese ports.
“There is definitely an opportunity for Middle East producers here, and particularly the biggest, Saudi Arabia,” he said.
Andrew Critchlow, head of energy news (EMEA) at S&P Global Platts, told Arab News that there was every likelihood of more demand from China for non-US oil and “Saudi Arabia and other Gulf Cooperation Council countries were the place to get it.”
OPEC already provides 56 percent of China’s oil imports, according to the International Energy Agency (IEA). The US has also been exporting increasing levels to the Asia powerhouse.
A report by the Houston Chronicle on Aug. 13, said that US crude exports to China surged from about 22,000 barrels per day (bpd) in 2016 to almost 400,000 bpd last year and early in 2018, accounting for about 20 percent of all US crude shipments.
This summer, those volumes fell below 200,000 barrels daily, said the report.
Critchlow said that the Kingdom was currently producing about
10.5 million bpd with spare capacity of around 2 million bpd, although the closer you get to that number, the more difficult it was to extract and process, he said.
Russia could also ramp up production, but not as much as KSA, said Critchlow.
“We now have the IEA upping its demand forecast for 2019. They have increased their OPEC barrels estimate by a few hundred thousand barrels a day and by half a million a day by 2019 (for the OPEC 15),”
he said.
But the scope for increased global export potential from the Gulf was also being driven by anticipated tighter supply after the reimposition of US sanctions against Iran later this year.
Still, there was a danger of demand erosion the longer the trade wars continued, and especially if there was further escalation.
Shakil Begg, head of Thomson Reuters oil research in London, warned that by the second half of 2019, global GDP could be cut if world trade levels contracted.
That would lead to a sharp fall in the price of crude, and even herald a US recession that could spill into Europe, he told Arab News.
But Critchlow made the crucial point that the big competition in the oil market today “is to win a bigger share of the Chinese and Asian market, including India.”
He said: “That’s where the battle for market share will take place over the next decade. Also, as Iranian barrels are lost, customers in nations such as China, South Korea, India and Japan will look to the GCC and others to step in.”
US exporters will still be a big force to be reckoned with, he said. The IEA has predicted that the US will overtake KSA and Russia as the largest producer by as early as 2019.
Mallinson said: “At the end of this year and the beginning of next, the market is going to get extremely tight. And the Saudis will have to pump at much higher levels.
“When you’ve got buyers restricted from where they go, it does create alternatives to move upwards,” said Mallinson.
But he warned that if the trade war worsens, it could hobble economic growth.
“These are the two largest economies in the world and it is not good news for them getting into a conflict like this.
“But even with a severe economic slowdown, we still see a tight oil market next year. Iran and sanctions are the biggest driver.”
Mallinson said that there were two other constraints: Underinvestment in capital projects outside the US, and infrastructure bottlenecks
in America.
“Those factors are big enough on the supply side to outweigh the possibility of a sharp slowdown of growth on the demand side,” he said.