Once upon a time (that is, before the pandemic), the last month before Christmas was ideal for buying presents for loved ones, and it was not extraordinary for the major e-retailers to reach a turnover of HUF 10 billion or even more in a single Black Friday day.
Those days, it seems, are over for good. The market researchers are looking for new terms to grasp the current consumption trends. Norbert Madar, lead manager at PwC Hungary Digital Commerce and Research Services (formerly GKid, but acquired and rebranded this year), says, “The market has become more balanced.” And that is an understatement.
The Hungarian customer base has never been fundamentally driven by impulse shopping. Even during significant promotions, they would plan their spending ahead of time and were not impressed by the latest model of TV, computer, or some other white goods. If the old one works, why change it just because the new model has one more button? The argument went.
By now, impulse shopping has disappeared almost entirely, and Black Friday this year is unlikely to unleash it. Now, retailers are looking to attract acquisitions that were already planned instead of going for extra spending, according to surveys.
For years, the consulting group GKID carried out studies before Black Friday. Under its new branding, it recently surveyed spending prospects for the upcoming Black Friday, commissioned by Publicis Groupe Hungary.
One of the main conclusions is that customers prepare not for one specific day but for a broader period of promotions. This is confirmed by retailers MediaMarkt and Euronics, which have rebranded Black Friday as Black November. Online retailer alza.hu still calls it Black Friday but has extended the 24-hour sales period from Oct. 30 to Dec. 2. Hardware store Praktiker went for a Black Weekend (Nov. 15-17) for registered customers.
In the United States, the major shopping holiday always takes place the day after Thanksgiving, making it the fourth Friday in November, which this year falls on Nov. 29. But even there, the event has become something of a moveable feast.
Meanwhile, back on this side of the Atlantic, another finding of the PwC Hungary survey indicates that the narrow base of 11% of shoppers who confirmed last year that they would make purchases on Black Friday has not expanded in 2024. The month-long sales period is probably a response by retailers to the trend that buyers plan their spending over a more extended period, while 60% said they would simply buy the products they intended to anyway.
Based on this, retailers cannot afford to lose customers by limiting the promotion to only one day. Especially given that customers were not particularly satisfied with the promotions last year. On a scale from one to five, shops were rated at 3.55, the quality of products and services at 3.69, and courier companies at 3.7.
However, satisfaction is not the only factor hindering massive Black Friday sales. One-quarter of respondents mentioned that low finances would prevent them from buying even at discounted prices. This may be surprising, considering that the inflation rate has dropped significantly compared to last year, at least from a statistical point of view, and is now at 3.2%. However, the perceived inflation is 10 times higher, according to market research company GKI.
According to its analysts, many are not aware of the official figures regarding inflation, but based on their day-to-day experience with store prices, they have a fixed perception of price growth and put that imagined figure at 20-30%, according to GKI. If shoppers genuinely believe that, discounts of 20-30% will make no difference, we might add.
Returning to the PwC survey, the estimated turnover during Black Friday is put at HUF 150 bln-160 bln, with an average spend per shopper of HUF 195,000. The most sought-after products are expected to be smartphones, tablets or smartwatches, with 48% of respondents indicating this category and planned spending of HUF 90,000 on average.
A much more significant sum is allocated on average for entertainment products, at HUF 235,000. Most respondents (62%) said they would buy home appliances like coffee machines, dishwashers and standing vacuum cleaners. PwC’s Madar notes, “Customers have become much more conscious. They are not making any more impulse purchases, but looking for the best offers for spending they have already budgeted for.”
One retailer has been omnipresent in Black Friday marketing in Hungary in previous years: eMag. The Romanian company acquired local competitor Extreme Digital in 2019 for EUR 20 million. At the time, the new entity targeted EUR 1 bln sales in the next six years. In 2023, eMag Hungary reached HUF 471.8 bln in revenues, an 11% increase compared to 2022.
The company planned its Black Friday promotion for Nov. 15 but gave few details. Based on a press release, eMag is looking to keep its customer base with its “Genius” subscription program, offering lower delivery prices and other promotions for HUF 5,000 per year, returned in coupons.
The company also offered a 0% interest rate credit with specific conditions. Contrary to the previous years, eMag did not commit to delivery deadlines for orders placed on Black Friday, nor did it mention its delivery service Sameday, possibly because of delivery delays and even lost packages, according to angry complaints posted on online forums by eMag customers.
Finally, a relatively recent development that (besides purchasing power) is also eroding local retailers’ margins is the growth of Asian e-commerce sites. So much so that Minister for National Economy Márton Nagy estimated in September that products ordered from abroad cause losses of HUF 100 bln for the Hungarian budget. He also suggested these orders were responsible for the low internal consumption impacting GDP growth.
This article was first published in the Budapest Business Journal print issue of November 15, 2024.
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