Black Friday Sales Soar or Black Hawk Down?
Summarizing the Black Friday sales in Hungary, they can probably be described as drowning in dullness. Surveys conducted before had already predicted little to no crazy spending, but the figures were probably even lower than the worst forecasts retailers foresaw. So low, in fact, that they would not even communicate them.
The crash in sales is presumably closely related to Hungarian macroeconomic figures impacting the solvency of households, given that in other countries, Black Friday promotions went well.
In the United States, for example, online shopping totaled USD 9.8 billion, a 7.5% increase from 2022. This means the tradition of storming the stores or waiting in line for hours to make a purchase has shifted to more online shopping. In-store purchases still rose year on year, but much less than online, at barely 1%. Cyber Monday, ongoing in the United States at the time of writing this article, will probably further add to another successful pre-Christmas sales season for retailers.
This year’s sales data in Hungary was particularly low, which significantly limited opportunities for attractive promotion prices. Low sales meant low revenues, which meant low profits. Therefore, the price reductions retailers were able to offer during Black Friday were seen as unattractive, generally not more than 30%.
However, EU regulations to protect consumers also limited marketing tricks previously used by retailers. In previous years, retailers often raised prices before the promotion period to make the cuts seem more appealing. The EU rules now state that the promoted price must be set based on the previous month’s lowest average price.
Black Friday also paved the way for some unexpected marketing campaigns, such as retailers calling on customers not to buy anything on Black Friday and to stay away from unnecessary shopping. Outdoor clothing and accessories retailer Mountex announced that it was protesting “against the environmentally destructive shopping frenzy and Black Friday” with a campaign to keep its hiking stores closed on Nov. 24.
Enjoy Nature Instead
The result of buying something “a little shinier, a little bigger, a little newer, or simply just another one of the same product” is leading to more garbage polluting the biosphere at such a pace that it is unable to regenerate. By keeping its stores closed on Black Friday, Mountex said it was encouraging its customers to go out and enjoy outdoor programs.
The outdoor clothing store even conducted an online survey about shopping plans and used clothing disposal habits. About 2,500 net users completed the survey, and according to this, relatively few, 28%, buy new clothing every two or three months. More than half buy second-hand garments, most of them, some 25% because they are cheaper and 20% because they focus on sustainability.
As for the clothes they already own, 65% said they wear most of them regularly, although 20% almost never wear most of the clothes they have. Regarding Black Friday, 59% said they would not buy anything on that day, 24% would decide based on the discount rate, and 14% would buy a product they had already selected.
Of those who planned to make purchases on Black Friday, the majority of 56% said they would spend a maximum of HUF 15,000, 14% put the likely range at between HUF 15,000 and HUF 30,000, and 12% more than HUF 100,000. Another critical question was what discount rate customers would find attractive. The majority would like to see price cuts of 40-50%, 30% wanted cuts of 30-40%, and 21% looked for between 20-30%.
So, what happened during the sales? At the time of writing, there is very little information. The largest online retailer, eMag, had not announced any sales estimate before its Black Friday event held on Nov. 17, and also no figures afterward. The only press release was published on the afternoon of that day and contained very scant information: the sales of small home appliances were higher than laptops, and smart devices and tablets sold better than clothing and home products.
Sales Information Dessert
While officially, Black Friday lasted one day at eMag, similarly to previous years, prices for many products remained at the Black Friday level for a week longer but under a differently branded promotion. This indicates that the Nov. 17 sale did not meet expectations in Hungary, and the company hoped to recoup as much as possible in the following days. But eMag’s lack of information in Hungary was not isolated; no other major retailer communicated sales figures, including MediaMarkt and Euronics.
In Romania, however, eMag boasted outstanding results and generously communicated these to the media and customers. A short summary of the Black Friday event, held on Nov. 10 across the border, tells the story. Emag estimated total sales on that day of RON 680 million (about HUF 51.6 bln), a target reached at 9 p.m., before finally going on to gross RON 730 mln, around HUF 55.4 bln. In 10 hours, the company sold 2.2 million products, an amount sold in 16 hours in 2022. On average, Romanians spent RON 1,367, or more than HUF 100,000.
What is behind these dramatic differences? Do Romanians have more money to spend than Hungarians? According to statistics, definitely not. Economic research institute GfK recently released this year’s report on the purchasing power in Europe.
Of the 42 countries examined, Hungary ranks 29th, with an average per capita purchasing power of EUR 10,834. This puts the country at 39% below the European average of EUR 17,688. Romanians, however, are 56% below the European average and even slipped two places down compared to the previous year, to 33. The average per capita purchasing power this year in Romanian is EUR 7,738, GKI says.
In both countries, the capital cities lead the ranking, Budapest with EUR 14,020 per person and Bucharest with EUR 15,314. Hungarian inflation, however, has been the highest in Europe for more than a year, which seems to have significantly eroded a willingness to spend, even at discounted prices, and perhaps also savings.
This article was first published in the Budapest Business Journal print issue of December 1, 2023.
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