KPMG: Profit Margins of Retailers have been Squeezed Since Black Friday Was Introducted to the UK

In the United Kingdom, the Black Friday phenomenon seems to be sticking around, as more and more retailers have offered discounts on both sides of the big day.

However, according to KPMG, there could be a darker side to the shopaholic frenzy. Data that was compiled by the accountancy firm has discovered that profit margins of the top 10 retailers by revenue of the United Kingdom have been squeezed since the event was introduced to UK shores around 2013.

An analysis of annual reports, sales revenue, and profit margin data has revealed a stagnation with regards to cumulative sales revenue since 2013 and decreasing profits.

Paul Martin, the KPMG’s UK head of retail, said: “Black Friday and similar discount-based retail events have certainly played a role in this state of affairs, but mounting cost pressures more broadly – as well as the overarching economic situation – will also have had a significant impact.

“Amidst all the hype of Black Friday, as consumers scrabble for bargains and retailers frantically parade their discounted wares, it is easy to overlook the undercurrent created by the retail event. Retailers, dazzled by top-line sales growth, could easily underestimate the impact prolonged discounting is having on their bottom line.”

Paul Martin explained that Black Friday forces retailers to offer their goods at discounted prices earlier, and for longer, while consumers have developed to anticipate the sales.

Martin added that research has revealed that the event does not increase sales for retailers over the Christmas trading period, but it simply brings spending forwards.

However, today Argos already had record numbers of visitors to the company’s website, while Barclaycard processed an all-time high of 976 transactions per second between 12pm and 1pm.

Read also: Barclaycard: Black Friday 2017 Purchases Hit a Record High During Lunchtime