Fighting Inflation on Black Friday, Whenever it Falls
In recent times, Black Friday has become the biggest sales event, generating the highest revenues of the year. In the weeks beforehand, retailers and market research companies have traditionally published their forecasts for growth and likely popular products. But this season, the whole phenomenon has become markedly less predictable.
Inflation, recession, and skyrocketing utility bills mean it is almost impossible to predict Black Friday spending accurately. Any statement and its polar opposite might equally well be true. Some will not buy anything because prices are too high, while others are making purchases now to avoid even higher prices later. According to analysts, inflation will likely peak at the end of the year, during Christmas.
Retailers are struggling hard to separate themselves from the competition. Most scheduled their Black Friday promotion for November 25, the “official” date, as it is the Friday after Thanksgiving. Others are going a week early, on November 18, and some have extended the sale from one day to a week or even two.
Retail chain Euronics stretched Black Friday from November 14 to 20 and made its forecasts based on the sales figures of the previous two years. In both 2020 and 2021, the most popular items sold were small home appliances (mostly coffee machines), followed by beauty products. This year, Euronics expects the same categories to lead the sales, along with growth in IT accessories and mobile phones. The football world cup is expected to drive sales of 55” or wider TV sets.
However, those counting on huge discounts will probably be disappointed, as the maximum will be around 20%. And even discounted products will still be more expensive than this time a year ago due to inflation of more than 20% and the depreciation of the forint, which is now 10% weaker compared toNovember 2021.
Dezső Dévavári, the business unit director at price comparison site olcsobbat.hu, says customers should expect discounts of 10-20%, or even below 10%, figures that a few years ago would have been ridiculed.
Retail store chain MediaMarkt conducted a pre-Black Friday survey, which indicated that 20% of the respondents say they are likely to buy energy-saving appliances that will reduce their expenses in the long term. Many are also planning to invest in IT products necessary for remote work. Some 16% plan to buy a laptop, desktop, or IT peripherals on Black Friday.
MediaMarkt also expects high sales of kitchen appliances, smartphones, TV sets, and tech gadgets for Christmas presents, like smartwatches, bracelets, wireless earphones and headphones, soundbars and “party” loudspeakers.
Retailer eMAG offers the opportunity for an interesting comparison, given that it operates both in Romania and Hungary, and it has already had the Black Friday promotion in the former, on November 11, while in Hungary, it is scheduled for today, November 18.
According to eMAG’s final figures, Romanians spent as never before on Black Friday, RON 644 million (HUF 52.8 billion) in total, compared to RON 609 mln last year. The average amount spent per client was RON 1,170 (HUF 96,000), compared to RON 1,083 in 2021.
As for the product categories with the highest sales, the list is directly linked to the products with the most inflated prices in the last 12 months:
Product category: drinks, groceries and pet shop: 380,000 sold, toys and kids products: 364,000 sold, perfumes, personal care and cosmetics: 276,000 sold, furniture and home products: 204,000 sold, small and large home appliances: 165,000 sold.
Smartphones, tablets, gadgets, TVs, and laptops ranked much lower, as did fashion.
The preferences in Hungary differ, at least according to a survey conducted by eMAG. Those who indicated their intention to participate in the Black Friday promotion said they would mostly buy clothing (28.8%), a 10% increase compared to last year.
An even more significant increase is expected in the food segment (drinks and food); this year, 12.7% of the respondents will make purchases in this category, compared to just 1.2% last year. As for technology products, most respondents (25%) said they would buy small home appliances, refrigerators, TVs and washing machines. Since most clients buy Christmas presents on Black Friday, it is no surprise that toys will sell well, too, eMAG says.
However, Hungarians seem much more restrained with spending. While in Romania, the average per client was the equivalent of HUF 96,000 on Black Friday, almost half of the Hungarian respondents plan to spend between HUF 15,000 and 60,000, and only 17% between HUF 60,000 and 100,000.
Market research company GKID (formerly GKI Digital) also surveyed Hungarian consumers and found that this Christmas, the most popular products will be innovative home appliances (air fryers, robot vacuum cleaners, beauty products) and medium-category smartphones. Also, many will buy clothing and cosmetics for Christmas presents. Following the international trends, the fashion segment is expected to grow significantly in Hungary, GKID says.
Balázs Várkonyi, chairman of the eMAG board of directors, confirmed at a press conference that the company expects the highest sales in energy-saving appliances and smart accessories aimed at reducing energy bills on Black Friday. Besides that, eMAG says it is experiencing a shift in consumer preferences. Until recently, buyers focused mainly on tech products, but now they turn more towards fashion, Várkonyi said.
Family Solvency Drops
A survey conducted in October by Intrum and GKI shows that the solvency of Hungarian families has dropped by 71% year on year. Solvency, an indicator calculated from prices, salaries, and consumer debts, reached a decade-low figure in Q3 2022 of 12.6 points, a 64% drop compared to the previous quarter. More and more families are feeling the impact of high energy prices and inflation and have started to save what money they can. This indicates the possibility of lower domestic consumption and increases the potential for a recession next year. By way of comparison, during the most severe COVID lockdown, the solvency index dropped no lower than 18.9 points.
This article was first published in the Budapest Business Journal print issue of November 18, 2022.
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