Black Friday is no longer just an American phenomenon, and that has big implications for investors in Irish retail property
Culturally, Ireland has moved closer to America over the last twenty years. Alongside a general growth in consumerism, this is evident in the increased visibility of US retail brands such as Disney, Abercrombie & Fitch and Hollister. However a more recent development has been the mainstream adoption of 'Black Friday' - a uniquely American phenomenon.
Black Friday is tailored to drive retail sales in the US context. Following immediately after the Thanksgiving, it capitalises on the fact that many Americans are already on holiday and have spare time for shopping. Moreover, the late November landing date provides a timely kick-start for the Christmas shopping season. Retailers have leveraged these advantages through heavy advertising, extended opening hours and generous discounting, and it is now the busiest shopping day of the year in America.
While Black Friday has been around for some time in Ireland, there is a perception that it shifted up a gear in 2015. Indeed, Irish retailers spent €14m on internet, outdoor, radio and TV advertising last November - 56pc more than in the previous month and 9pc more than in November 2014.
Despite this, however, questions remain about the transferability of Black Friday to Ireland and its effectiveness in driving business. An analysis of retail turnover should be able to address these questions. But, because they are only published on a monthly basis, it is difficult to assess the impact of Black Friday from official retail sales data.
Footfall figures, however, provide an alternative window into retail sector activity. These are primarily available from two sources. DublinTown, the city centre business association, counts pedestrian movements using its network of high street cameras. Additionally, individual shopping centres collect footfall data from automated counters which are triggered as people pass through the doors.
Data from the former source indicate that Black Friday had a major impact in 2015. Over the previous nine Fridays, combined pedestrian movements on Grafton Street, Henry Street and Mary Street were quite stable and averaged 271,409. However traffic shot up to 318,910 on Black Friday (27th November) - an increase of nearly 25pc over the previous week. And this was not a blip. Instead it initiated a sustained period of higher activity that lasted right through to Christmas.
The cameras do not, however, tell a uniformly positive story. Although there was a dramatic week-on-week increase, footfall on Dublin's main shopping streets was down by 3.5pc compared with Black Friday 2014. One reason for this might have been the weather; it rained in Dublin on 27th November, whereas Black Friday was dry in 2014.
This highlights one limitation of outdoor camera data - they are highly sensitive to weather-effects. Another issue is that the cameras cannot distinguish between shoppers and pedestrians who are, for example, commuting. Given these factors, it is useful to also look at shopping centre footfall data which are less skewed by weather and non-retail traffic. The Jervis Centre - a 35,000 sq m city centre mall with around 70 stores - provides a good example. Here, footfall on November 27 was 78,838, a 68pc increase on the previous Friday. Consistent with the street camera data, the Jervis figures also show that Black Friday kick-started a period of higher footfall that continued until Christmas.
Notably, however, whereas the outdoor cameras indicate an annual decline in footfall on Black Friday, the Jervis Centre data show exactly the opposite. Despite a slight fall in overall city centre pedestrian movements - probably because of the rain - the number of shoppers entering the centre actually rose by 51pc compared with 2014.
Several findings emerge from this analysis. Firstly, Black Friday is associated with a sharp increase in footfall, suggesting that this US concept is resonating with Irish consumers. Secondly, Black Friday appears to have become the de facto curtain raiser for the Christmas shopping season; Following the initial marketing blitz footfall has tended to remain elevated for the remainder of the year. Thirdly, the shopping centre data at least, confirm that Black Friday is becoming bigger, with footfall rising sharply between 2014 and 2015.
Overall, the Black Friday model appears to be effective in driving retail activity. However, nothing in life is free. We have seen that retailers are spending more on advertising around Black Friday, while extended opening hours mean higher staff costs. Retailers are also having to discount to drive sales - average prices fell nearly 1pc in November. Moreover, there is evidence that starting the Christmas shopping season earlier may just spread sales over a longer period - contrary to the usual trend, retail sales actually fell by 0.7pc in December 2015 compared with November.
No doubt this model will evolve further, but the true impact of Black Friday on retailer profits will probably only be seen in time as improving confidence gradually changes consumers' behaviour.
Dr John McCartney is director of research with Savills